UK house prices end 2024 with strong growth – Nationwide

The UK’s house prices ended 2024 on a positive note, with a 4.7% increase compared to December 2023, Nationwide reports.

It says this growth, while strong, kept prices slightly below the peak reached in the summer of 2022.

Despite the ongoing affordability challenges, including high mortgage rates and deposit hurdles, the housing market demonstrated resilience throughout 2024.

Mortgage approvals for house purchases even surpassed pre-pandemic levels towards the year’s end, Nationwide reports.

‘House prices proved surprisingly resilient’

The lender’s chief economist, Robert Gardner, said: “Mortgage market activity and house prices proved surprisingly resilient in 2024 given the ongoing affordability challenges facing potential buyers.

“At the start of the year, house prices remained high relative to average earnings, which meant that the deposit hurdle remained high for prospective first-time buyers.

“This is a challenge that had been made worse by record rates of rental growth in recent years, which has hampered the ability of many in the private rented sector to save.”

He added: “Moreover, for many of those with sufficient savings for a deposit, meeting monthly payments was a stretch because borrowing costs remained well above those prevailing in the aftermath of the pandemic.”

Nationwide is predicting that the stamp duty changes will see a surge in house purchasing in the first three months of 2025 – followed by a weak marketplace for up to six months.

‘Buyers will be keen to rush sales’

Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “December typically sees a pause in the property market, when hitting the streets for quality properties makes way for hitting the Quality Streets for the purple ones.

“However, like a salad or a spin class, property price rises made an unusual appearance in December, as the looming end of the stamp duty holiday persuaded people to leave the sofa for a spot of house hunting.”

She adds: “The start of 2025 is likely to feel the impact of the tax break too, and buyers will be keen to rush sales through while there’s a decent chunk of tax to be saved.

“However, as time goes on, affordability threatens to keep a lid on both sales and prices.

“Prices are edging even closer to a record high, and with the average two-year fixed rate mortgage sticking around the 5.5% mark, it means a real stretch for buyers.”

‘Prices grew by 4.7%’

Holly Tomlinson, a financial planner at Quilter, said: “On an annual basis, prices grew by 4.7% demonstrating a level of resilience despite the headwinds of higher borrowing costs and affordability pressures.

“Strong employment levels, easing inflation and improving mortgage rates have helped sustain demand, particularly in more affordable regions.

“December’s data provides tentative evidence that the market is adapting to the ‘new normal’ of higher but stabilising interest rates.”

Ms Tomlinson also highlighted that affordability challenges for first-time buyers is an issue – along with rising house prices.

‘Borrowing rates and affordability’

Nathan Emerson, the chief executive of Propertymark, said: “With a degree of uncertainty still looming regarding borrowing rates and affordability, alongside rises to Stamp Duty for buyers in England and Northern Ireland commencing from April 2025, many people are extremely keen to move sooner rather than later, defying the usual winter lull normally seen this time of year.

“However, once the dust has settled following the anticipated rush heading towards April, buyers and sellers may reap the rewards of a slower-paced market which may allow opportunities for greater negotiation on price from both buyers and sellers.”

Matt Thompson, the head of sales at Chestertons, said: “December 2024 was one of the busiest Decembers in years in terms of buyer demand. This was driven by first-time buyers who were keen to get on the property ladder before this year’s changes to Stamp Duty but also by second steppers, including young families wanting to upsize.

“Despite the uplift in buyer enquiries, rapid price increases are unlikely this year but improved affordability, pent-up demand and renewed confidence in the market should provide support for steady growth in property values. As such, we predict property prices to rise by 3.4% across the UK and 3% in London this year.”

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