House prices rose by 4.7% in 2024, says Nationwide
3 min read
UK house prices experienced a rise of 4.7% in 2024, according to the latest data from Nationwide. Despite facing significant affordability challenges, the property market showed resilience throughout the year. The Nationwide reported that the average price of a home in the UK at the end of December was £269,426, reflecting this annual increase. However, it is still lower than the peak observed during the summer of 2022.
Among the different property types, terraced homes saw the fastest price growth. Regional variations were also evident, with Northern Ireland experiencing the most significant price increases, while northern England also outpaced the south in terms of growth. Nevertheless, all regions saw an overall rise in house prices.
Looking ahead to 2025, housing experts predict a mixed outlook for the market. Much of the uncertainty stems from the fluctuations in interest and mortgage rates, as well as expected changes in stamp duty. A rise in housing transactions is anticipated over the next few months, particularly before the anticipated changes to stamp duty take effect in April. These changes will lower the threshold for paying stamp duty on properties to £125,000 from the current £250,000. Additionally, first-time buyers will see a reduction in the stamp duty exemption on homes up to £425,000, dropping to £300,000.
While many anticipate a gradual reduction in interest rates by the Bank of England throughout 2025, starting potentially as early as February, there is a degree of caution in predicting the exact timing or magnitude of these changes. Andrew Bailey, Governor of the Bank of England, recently remarked that the current global economic situation made it difficult to accurately predict when and how much interest rates would fall.
The affordability challenges for first-time buyers remain significant, according to Robert Gardner, Nationwide’s chief economist. House prices continue to be high relative to average earnings, making it difficult for many prospective buyers to save for a deposit. The situation has been further complicated by rising rental prices in recent years, which have limited the ability of renters to save for a home of their own.
Financial planner Holly Tomlinson, from investment firm Quilter, echoed concerns about the impact of the upcoming stamp duty changes. She noted that these changes would likely make purchasing a home even more difficult for first-time buyers, adding to the financial strain at a time when every penny counts.
Some lenders are hopeful that falling mortgage rates and rising wages will help improve housing affordability in 2025. UK Finance, the lenders’ trade body, has forecast a 10% rise in mortgage lending for house purchases in the coming year. However, some analysts have raised doubts about the optimism of this prediction, suggesting that lenders may face challenges in achieving such a significant increase.
Looking beyond 2025, affordability challenges are expected to persist, especially as many homeowners face higher mortgage payments when their fixed-rate deals expire. Around 80% of mortgage holders in the UK currently have fixed-rate mortgages, which provide stability until the deal expires, typically after two or five years. Even if mortgage rates decrease in the coming months, many homeowners will still be paying more than they are currently on their fixed-rate deals. The Bank of England estimates that by 2027, around 4.4 million mortgage holders will see their payments rise. It is anticipated that typical homeowners coming off a fixed-rate deal in the next two years will experience an average monthly mortgage repayment increase of £146.
Nationwide’s house price data is based on its own mortgage lending, which does not include cash buyers or buy-to-let transactions. Cash buyers, who account for approximately one-third of housing sales, are not reflected in this dataset. Rival lender Halifax is expected to release its final data for 2024 soon, which will provide further insights into the housing market’s performance.
About The Author
