For the first time since March, UK house prices declined in December 2024. This decrease comes as experts anticipate an increase in sales over the next few months, primarily due to upcoming changes in stamp duty.
Average House Price Falls 0.2% from November
According to Halifax, the average house price dropped by 0.2% in December 2024, reaching £297,166. This decline follows five consecutive monthly increases. On an annual basis, prices rose by 3.3%, a decrease from the 4.7% growth observed in November.
Regional Variations in House Price Growth
While Northern Ireland showed the strongest annual house price growth in the UK, with an increase of 7.4% to an average price of £205,895, Wales experienced a 4.6% year-on-year growth, with properties costing £226,646 on average.
In contrast, Scotland’s annual rate was lower than the rest of the UK, standing at 2.4%, and averaging £209,959. London retained its position as having the highest average house price across the country, reaching £547,614, up 3.3% year-on-year.
Stamp Duty Changes to Boost First-Time Buyers
Amanda Bryden of Halifax noted that "the housing market was broadly steady at the start of 2024, with house price growth taking off from the summer onwards." She attributed this trend to mortgage rate falls and income growth, which led to a decrease in financial pressures for buyers.
The upcoming changes to stamp duty, set to take effect in April, will see the "nil rate" band for first-time buyers shrink from £425,000 to £300,000. This change is expected to motivate prospective first-time buyers to bring their home-buying plans forward and increase sales over the next few months.
Stamp Duty-Free Homes
Only 8% of homes for sale in London will be stamp-duty free for first-time buyers from April. However, 24% will be exempt in the south-east, and 32% in the east of England.
Looking Ahead to 2025
Bryden commented on the outlook for 2025, stating that "mortgage affordability will remain a challenge for many, especially as the [Bank of England base rate] is likely to come down more slowly than previously predicted." However, she anticipates modest house price growth this year, provided employment conditions do not deteriorate significantly.
Buyer Demand Remains Strong
Despite the slowdown in house prices, Matt Thompson, head of sales at Chestertons, reported that December 2024 was one of the busiest Decembers in years, driven by first-time buyers and second-steppers. Ashley Webb, UK economist at Capital Economics, disagreed with this assessment, stating that recent rises in mortgage rates may have started to weigh on the housing market.
Contrasting Views on House Price Growth
Webb’s view that house prices will rise by a healthy 3.5% in 2025 compared to the consensus forecast of 2.5-3.0% contrasts with Bryden’s anticipation of modest growth.
Nationwide Figures Show Contrasting Trends
Separate figures from Nationwide, based on mortgages it approves, revealed that house prices rose more than expected in December and at the fastest annual rate since October 2022.
In conclusion, while UK house prices fell in December, experts anticipate an increase in sales over the next few months due to upcoming changes in stamp duty. As the housing market navigates these changes, buyer demand remains strong, and contrasting views on house price growth highlight the complexity of predicting future trends in the market.
