For the first time since March, UK house prices fell in December 2024, marking a significant change in the market trend. Despite this decline, experts expect sales to increase over the next few months, driven by prospective buyers rushing to beat the changes to stamp duty that will take effect from April.
Average House Price Falls 0.2%
According to Halifax, the average house price fell by 0.2% in December, reaching £297,166. This decline marks a significant change from the five consecutive monthly increases experienced earlier this year. On an annual basis, prices were up 3.3%, down from 4.7% growth in November.
Regional Variations in House Price Growth
The regional variations in house price growth are evident across the UK. Northern Ireland showed the strongest annual house price growth, with a 7.4% increase to an average of £205,895. Wales followed closely behind, with prices up 4.6% year-on-year, reaching an average of £226,646.
In contrast, Scotland experienced lower annual rate of house price growth at 2.4%, with an average price of £209,959. London continued to retain the highest average house price across the country, standing at £547,614, up 3.3% year-on-year.
Stamp Duty Changes Expected to Boost Sales
Amanda Bryden, a housing expert from Halifax, attributes the expected increase in sales to the changes in stamp duty that will take effect from April. The "nil rate" band for first-time buyers will shrink from £425,000 to £300,000, providing prospective first-time buyers with more motivation to get on the housing ladder.
Stamp Duty Implications
The changes to stamp duty will have varying implications across different regions in England and Northern Ireland. Only 8% of homes for sale in London will be stamp-duty free for first-time buyers from April, compared to 24% in the south-east and 32% in the east of England.
Mortgage Affordability Remains a Challenge
Bryden cautions that mortgage affordability will remain a challenge for many, especially as the Bank of England base rate is likely to come down more slowly than previously predicted. However, providing employment conditions don’t deteriorate markedly from a recent softening, buyer demand should hold up relatively well.
Modest House Price Growth Expected
Despite the slowdown in house price growth, Bryden continues to anticipate modest house price growth this year, citing employment conditions and financial pressures easing for buyers as key factors.
Expert Insights
Matt Thompson, head of sales at Chestertons, notes that 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.
Ashley Webb, UK economist at Capital Economics, suggests that recent rises in mortgage rates may have started to weigh on the housing market at the end of last year. However, he expects house prices to rise by a healthy 3.5% in 2025 compared to the consensus forecast of 2.5-3.0%.
Separate Figures from Nationwide
Figures from Nationwide show that house prices rose more than expected in December and at the fastest annual rate since October 2022, according to separate figures by the lender.
