House prices in the UK are on the verge of reaching a record high, as reported by Nationwide. The building society noted a 4.7% increase in house prices in December compared to the previous year, just below the all-time high recorded in the summer of 2022. In Wales, the rise was slightly more modest at 2.7%, bringing the average house price in the region to £207,187. This stands in contrast to the UK average of £269,426. Robert Gardner, Nationwide’s chief economist, pointed out that despite ongoing affordability challenges, the housing market remained resilient in 2024, with mortgage market activity and prices holding steady.
Gardner highlighted the difficulties faced by first-time buyers, who struggled with high house prices relative to average earnings, making it challenging to save for a deposit. He also mentioned the impact of record rates of rental growth on the ability of renters to save for a deposit. The chief economist noted that mortgage rates had increased significantly throughout the year, posing additional challenges for buyers. Despite these challenges, housing market activity increased in 2024, with more mortgages approved for house purchases compared to pre-pandemic levels.
Looking ahead, Gardner anticipated a surge in property sales in the first quarter of 2025 due to upcoming stamp duty changes. The changes, effective in April, are expected to lead to increased activity in the housing market as buyers rush to complete purchases before the new thresholds take effect. However, this surge may be followed by a period of slower activity in the subsequent months, making it difficult to gauge the true strength of the market. Gardner expressed optimism that the housing market would see a gradual increase in activity in the coming year as economic recovery, lower interest rates, and earnings growth improve affordability.
Amidst these developments, there was a clear disparity in house price performance between regions in England, with the North outpacing the South in terms of annual price increases. Northern Ireland and Scotland also saw significant price rises in 2024, while flats experienced their best year since 2021 in terms of price growth. Terraced houses saw the largest percentage rise in prices, reflecting changing property preferences in the wake of the pandemic. The long-term trend showed detached homes maintaining a slight price edge over other property types, likely driven by the demand for more space during the pandemic.
Industry experts shared their insights on the housing market, with comments from Sarah Coles, head of personal finance at Hargreaves Lansdown, and Nicky Stevenson, managing director at Fine & Country. They highlighted the impact of factors like the end of the stamp duty holiday on buyer behavior and market dynamics. Iain McKenzie, chief executive of the Guild of Property Professionals, and Jeremy Leaf, a north London estate agent, also provided perspectives on market trends and buyer sentiment.
In conclusion, despite the challenges posed by affordability and changing market conditions, the UK housing market remained robust at the close of 2024. With expectations of increased activity driven by stamp duty changes and economic factors, the housing market is poised for continued growth in 2025. As buyers navigate evolving market conditions, industry experts emphasised the importance of understanding deposit requirements and market dynamics to make informed decisions in the property market.