"Mortgage market activity and house prices proved surprisingly resilient in 2024 given the ongoing affordability challenges facing potential buyers."
- Robert Gardner, Nationwide's chief economist
UK house prices ended 2024 on a strong footing, up 4.7% compared with December 2023, though prices were still just below the all-time high recorded in summer 2022, according to the December house price index from Nationwide.
House prices increased by 0.7% month on month, after taking account of seasonal effects, following a 1.2% rise in November.
Nationwide's data for Q4 shows that all regions saw price rises over 2024. Northern Ireland was the best performing area for the second year running, with prices up 7.1% over the year. Scotland recorded a 4.4% increase in 2024, whilst Wales saw a 2.7% year-on-year rise.
Across England overall, prices were up 3.1%, compared with Q4 2024. There was a clear north-south divide in house price performance in 2024 as Northern England (comprising North, North West, Yorkshire & The Humber, East Midlands and West Midlands) continued to outperform southern England, with prices up 4.9% year on year. The North was the best performing English region, with prices up 5.9% year on year.
Southern England (South West, Outer South East, Outer Metropolitan, London and East Anglia) saw a 2.2% year-on-year rise. The South West was the best performing southern region with annual price growth of 2.7%. East Anglia was the weakest performing UK region in 2024, with a modest 0.5% annual increase.
Robert Gardner, Nationwide's chief economist, said: “Mortgage market activity and house prices proved surprisingly resilient in 2024 given the ongoing affordability challenges facing potential buyers. At the start of the year, house prices remained high relative to average earnings, which meant that the deposit hurdle remained high for prospective first-time buyers. This is a challenge that had been made worse by record rates of rental growth in recent years, which has hampered the ability of many in the private rented sector to save.
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% deposit hovered around 4.5% for much of the year, three times the 1.5% prevailing in late 2021, before the Bank of England started to raise the Bank Rate.
“As a result, it was encouraging that activity levels in the housing market increased over the course of 2024 with the number of mortgages approved for house purchase each month rising above pre-pandemic levels towards the end of the year.
“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 (especially in March) and a corresponding period of weakness in the following three to six months, as occurred in the wake of previous stamp duty changes. This will make it more difficult to discern the underlying strength of the market.
“But, 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% range in 2025 once stamp duty related volatility subsides."
Jonathan Hopper, CEO of Garrington Property Finders, commented: “So much for the traditional Christmas cooldown in the property market. With both prices and activity levels rising in December, the market ended 2024 strongly and this momentum is carrying into 2025.
“Two factors combined to keep estate agents busy last month, at a time when househunters often pause their search to start afresh in the New Year.
“The first is the gathering ‘stamp duty stampede’ as many first-time buyers race to complete their purchases before the stamp duty thresholds change at the end of March.
“The second is that while mortgage interest rates barely budged in December, the realisation that cheaper mortgages are on their way is spurring some would-be buyers into action.
“Many who held off in 2024 now have both the will and the way to move, and this is likely to get the market out of the blocks strongly in the coming weeks.
“Money flows where attention goes, and this is why price rises have been sharpest in the most affordable parts of the UK and among first-time buyers.
“Meanwhile, the abundant number of homes for sale is providing plenty of choice for buyers while also keeping price growth in check.
“March’s stamp duty deadline will provide a strong but short-term distortion at the lower end of the market, but the benefits of cheaper mortgages will be enjoyed more widely and gradually.
“While many buyers remain highly price-sensitive, steadily improving sentiment will encourage more people to press ahead with their moving plans before prices rise further.”
Nicky Stevenson, managing director at national estate agent group Fine & Country, added: "As 2025 begins, the housing market is entering another pivotal year, balancing tax changes with broader economic trends shaping buyer activity.
"December 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 the April 2025 stamp duty threshold changes, driving growth both monthly and annually.
"Indicators show the market ended 2024 on a high note, with house price indices underscoring its resilience. While regional differences are notable — with some areas seeing price increases of over 17% (£33,000) and others experiencing smaller declines — the overall picture remains robust and dynamic.
"As 2025 unfolds, the urgency of pre-April transactions may ease, potentially leading to a more balanced market. Rising living costs and inflation could encourage some buyers to take a measured approach, but this also creates opportunities for those entering a market that may tilt in favour of buyers later in the year.
"If demand slows due to fewer buyers actively making purchases, sellers may feel pressure to lower prices or offer more favourable terms to attract buyers. This creates opportunities for those still in the market, as they might find it easier to negotiate better deals, potentially making 2025 a ‘buyer’s market’.
"With tax reforms coming into effect and economic pressures persisting, regional disparities may deepen, and the pace of price growth could moderate slightly.
"Long-term demand for housing remains strong, supported by enduring consumer needs. While price growth may slow slightly, this creates space for buyers to explore options, take their time, and make informed decisions.
"Despite some challenges, 2025 presents a chance for the market to stabilise and achieve more sustainable growth. Buyers and sellers alike will adapt, finding opportunities even amid uncertainty and paving the way for a more balanced housing market in the years ahead."
