UK house prices ended 2024 with strong growth, rising 4.7 percent year-on-year last month. The Northern regions saw higher price growth than the Southern regions with Northern Ireland recording the best performance for the second year in a row and East Anglia recording the weakest performance. A recent report from the Nationwide Society revealed that average house prices last year reached £269,426.
“Prices were still just below the all-time high recorded in summer 2022. House prices increased by 0.7 percent month-on-month, after taking account of seasonal effects, following a 1.2 percent rise in November,” stated Robert Gardner, Nationwide’s chief economist.
All regions saw price growth
The report revealed that all of the UK’s regions saw house prices increase in 2024. Northern Ireland was the best-performing area for the second year running, with prices up 7.1 percent. Scotland recorded a 4.4 percent increase in 2024, while Wales saw a 2.7 percent year-on-year rise.
Across England, prices were up 3.1 percent compared with Q4 2024. However, Northern England continued to outperform Southern England, with prices up 4.9 percent year-on-year. The North was the best-performing English region, with prices up 5.9 percent year-on-year. Meanwhile, Southern England saw a 2.2 percent annual rise in house prices.
The South West was the best-performing southern region with annual price growth of 2.7 percent. Meanwhile, East Anglia was the weakest-performing UK region in 2024, with a modest 0.5 percent annual increase in house prices.
Mortgage activity resilient
Mortgage market activity and house prices proved their resilience in 2024 given the ongoing affordability challenges facing potential buyers. At the beginning of the year, house prices remained high compared to average earnings, raising deposit hurdles for prospective first-time buyers.
“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. For example, a typical mortgage rate for someone with a 25 percent deposit hovered around 4.5 percent for much of the year, three times the 1.5 percent prevailing in late 2021, before the Bank of England started to raise the Bank Rate,” added Gardner.
Despite funding challenges, activity levels in the housing market increased in 2024 with the number of mortgages approved for house purchase each month rising above pre-pandemic levels towards the end of the year.
Read: U.S. new home sales rise 5.9 percent to 664,000 in November
Will prices continue to rise in 2025?
Gardner explained that upcoming changes to stamp duty are likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax. This will lead to a jump in transactions in the first three months of 2025 and a period of weakness in the following three to six months, a trend that prevailed following previous stamp duty changes.
“Providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth. The latter is likely to return to the 2-4 percent range in 2025 once stamp duty-related volatility subsides,” he added.
