UK House Prices Surge: Ending 2024 Just Below Record Highs
House prices in the UK have wrapped up the year on a robust note, closely trailing the historical peak, as reported by Nationwide Building Society. Nationwide observed a 4.7% annual uplift in house prices in December, an increase from November’s 3.7%. In Wales, this growth was slightly more subdued, coming in just under 3%.
The average house price in Wales rose by 2.7% over the last year, reaching £207,187, compared to the UK’s average of £269,426.
Nationwide’s chief economist commented on this trend, acknowledging the strong finish for house prices in 2024, despite remaining slightly below the all-time high recorded in 2022, which was £273,751.
There have been significant challenges for first-time buyers throughout the year. With house prices remaining high relative to average earnings, the deposit barrier has stayed elevated, particularly exacerbated by soaring rental growth rates. These factors have hindered many potential buyers in the private rented sector from saving effectively.
Compounding this, mortgage rates have increased substantially. Rates surged for borrowers with a 25% deposit, reaching around 4.5% for much of 2024, a stark contrast to the low of 1.5% seen in late 2021. This made monthly payments a stretch for many, adding to the challenges faced by those with enough savings for a deposit.
Despite these challenges, the housing market exhibited surprising resilience throughout 2024. Activity levels increased, with mortgage approvals for house purchases each month exceeding pre-pandemic levels as the year drew to a close.
Looking ahead, upcoming stamp duty changes are expected to significantly impact the market, as buyers rush to complete their purchases before the increased tax burden takes effect in April. These changes will lower the “nil rate” threshold for first-time buyers from £425,000 to £300,000 in England and Northern Ireland, which could lead to a surge in property transactions in early 2025.
Nationwide expects this flurry of activity to peak in March, followed by a subsequent slowdown over the next quarters, making it challenging to gauge the market’s underlying strength. However, a stable economic recovery coupled with modestly lower interest rates is anticipated to drive a gradual increase in market activity as affordability issues lessen.
Regional disparities in house price performance were also notable throughout the year. Northern England outpaced southern regions, showcasing a 4.9% year-on-year increase, while southern England saw a more modest 2.2% rise. Northern Ireland was the standout performer once again with a 7.1% annual increase, followed by Scotland with a 4.4% increase.
When examining different property types, terraced houses recorded the largest percentage increase in prices, with an average rise of 4.4% in 2024. Flats enjoyed a resurgence in price growth, achieving a 4.0% rise, marking their best performance since 2021. Semi-detached properties increased by 3.4% annually, while detached properties saw a 3.2% rise. Over the long term, detached homes have maintained a slight advantage over other types, largely due to the “race for space” triggered by the pandemic.
As we enter 2025, there’s an expectation of a more balanced housing market following the initial rush to beat stamp duty changes. Observers anticipate that this urgency will taper off, moderating market dynamics. New trends, such as further anticipated rate cuts, continued economic recovery, and earnings growth, are likely to mitigate some potential dampening effects on the market.
Recent patterns suggest sales will continue progressing slowly towards completion, with minimal renegotiation or transaction failure. First-time buyers remain eager to capitalize on stamp duty concessions before changes are enacted in April.
Here’s a snapshot of average house prices and annual increases for the fourth quarter of December 2024, as reported by Nationwide Building Society:
- Northern Ireland: £197,696, 7.1% increase
- North East: £164,696, 5.9% increase
- North West: £218,012, 5.5% increase
- West Midlands: £245,173, 4.7% increase
- East Midlands: £235,877, 4.4% increase
- Yorkshire and Humber: £207,373, 4.4% increase
- Scotland: £187,016, 4.4% increase
- South West: £306,730, 2.7% increase
- Wales: £207,187, 2.7% increase
Meanwhile, the Outer Metropolitan area experienced an average price of £422,372, a 2.4% rise, and the Outer South East saw a 2.3% increase to £336,224. London’s average rose by 2.0% to £525,535, while East Anglia increased by 0.5%, reaching £272,152.
As the dynamics of the housing market continue to evolve, 2025 is poised to bring about both challenges and opportunities as buyers, sellers, and financial institutions navigate the post-stamp duty landscape.
