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UK house prices rose more than expected in December, boosted by buyers rushing to close deals ahead of April’s crop boost, according to lender Nationwide.
Prices rose 0.7 per cent compared with November, more than the 0.1 per cent rise expected by economists, taking the average house price to £269,426, just below the record high price set in 2022.
Nationwide said home prices were 4.7 percent higher in December than a year earlier, the fastest annual pace since October 2022 and beating economists’ expectations for a 3.8 percent rise.
“Mortgage market activity and home prices have proved surprisingly resilient in 2024 given the ongoing affordability challenges facing potential buyers,” Robert Gardner, Nationwide’s chief economist, said Thursday.
Nicky Stevenson, managing director of estate agent group Fine & Country, said house prices “continued to defy expectations, with house prices continuing to rise despite the usual seasonal slowdown”.
“This reflects strong demand as buyers moved quickly to secure deals ahead of changes to the benchmark threshold in April 2025,” he added.
Chancellor Rachel Reeves confirmed in the Budget that the temporary stamp duty holiday would end in March, prompting many analysts to expect a rush of advance transactions. From April, for example, first-time buyers will start paying tax on properties worth £300,000 or more, instead of the current £425,000.
Mortgage rates rose in November after the Budget, reflecting expectations that the Bank of England will cut borrowing costs more slowly than previously forecast.
However, borrowing costs are still well below their peak last summer. The average quoted two-year fixed interest rate at 60 percent loan-to-value was 4.39 percent in November, according to Bank of England data. That’s up from 4.21 percent in October, but well below the 6.22 percent reached in July 2023.
“The national house price index suggests that the stimulus from pent-up demand that emerged after the budget had some time left,” said Alex Kerr, economist at Capital Economics. “Surprisingly, the increase in demand has offset the recent rise in mortgage rates.”
House prices rose across all regions in the final quarter of 2024, with Northern Ireland reporting the fastest annual pace of 7.1 per cent, according to Nationwide.
However, the lender reported that across England there was a “clear north-south divide” in house price developments in 2024, with an increase of 4.9 per cent in the north but just 2.2 per cent in the south.
Gardner expects UK house prices to rise between 2 per cent and 4 per cent in 2025.
It also predicts a gradual pick-up in housing market activity “as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing home price growth.”
