House prices reach record high in 2024 with further growth expected in 2025

House prices hit record highs this year, with further price rises expected in 2025, according to Halifax.

The bank reports that property prices rose to £298,083 following annual growth of +4.8%, with transaction volumes returning to pre-pandemic levels.

Halifax also predicts that mortgage affordability will remain a challenge in the New Year, as the Bank of England may make additional cuts to the base rate next year.

Market remained largely flat until the summer

According to Halifax, annual house price growth stands at +4.8% (year to November), the strongest since November 2022. Property prices fell on a monthly basis only once in 2024, with a -0.9% drop in March.

For first-time buyers, property prices rose by +4.1% over the last year, reaching £234,361, while home-movers saw a +5.0% increase, with an average price of £356,491.

Northern Ireland experienced the highest annual property price inflation of any UK region or nation, at +6.8%, while Scotland saw the slowest growth, at +2.8%.

Amanda Bryden, head of Halifax Mortgages, said: “2024 was a year when UK property prices once again defied expectations, rising by +4.8% on an annual basis, to now sit at a record high of £298,083.

“The market remained largely flat until the summer, with most of that growth concentrated in the second half of the year.

“Two key factors have driven the recovery in the housing market over the last 12 months. The first is lower mortgage rates, at times up to 160 basis points below the peaks of 2022 and 2023.

“Second is that income growth continues to catch up with the consumer price increases of the past few years. For new mortgages, monthly costs as a percentage of earnings fell from 33% to 29% over the last year.”

Ms Bryden adds: “This easing financial pressure has boosted buyer confidence as demand for mortgages reached its highest level in more than two years, with volumes now back in line with pre-pandemic levels, having trailed by around 20% at the start of the year.

“The uneven availability of properties for sale across the country, relative to demand, also continues to underpin prices.

“Higher mortgage rates compared to a few years ago may have made some homeowners hesitant to sell, to avoid triggering an immediate increase in their monthly mortgage cost when they move.”

Further cuts to Bank Rate are still on the cards

According to Halifax, modest house price growth in the range of 0% to +3% is expected for 2025, along with a further small increase in the number of transactions.

Ms Byrden says the property market will be shaped by the Bank of England’s decisions on how many times they will cut the base rate.

She said: “Looking ahead to 2025, despite the positive trends we’ve seen over recent months, there’s no doubt mortgage affordability remains a challenge for many buyers.

“While further cuts to Bank Rate are still on the cards, the pace looks likely to be more gradual than previously anticipated, and many homeowners with older fixed-rate deals ending next year face refinancing at much higher rates.

“However, with employment conditions remaining positive, buyer demand should continue to hold up well.”

Reaction to Halifax

Toby Leek, NAEA Propertymark President, said: “Mortgage lenders have introduced more competitive mortgage products to the market compared to those seen last year, however with the slight dampening news of a rise in inflation, it is likely that mortgage offers will only continue improving once inflation tracks downward so that interest rates can be cut.

“With wages on a slight upward trajectory and affordability pressures easing for many, buyers and sellers will gain the extra confidence and financial boost needed to make their next home move a reality. Alongside this, home movers across England and Northern Ireland will be pushing their next home move in order to beat the commencement of rises in Stamp Duty from April 2025 so a flurry of market and mortgage activity is to be expected in the coming months.”

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