UK housing market ends 2024 with notable growth

This increase comes despite ongoing affordability challenges in the housing market. Nationwide’s data suggests that house prices remained just below their peak recorded in the summer of 2022.

In December alone, house prices saw a month-on-month increase of 0.7%, building on a 1.2% rise in November. Nationwide’s Chief Economist, Robert Gardner, noted this resilience in the housing market, particularly as mortgage rates have increased significantly compared to the rates seen during the pandemic.

With a typical mortgage rate around 4.5% for those with a 25% deposit, this reflects a tripling from the 1.5% rates observed at the end of 2021, adding extra burden to potential buyers.

When looking at regional performance, Northern Ireland emerged as the strongest area, recording a price rise of 7.1% over the year. Scotland followed with an increase of 4.4%, while Wales saw a 2.7% rise. 

Across England, house prices rose by 3.1%; however, the north-south divide was evident, with Northern regions, showing an overall increase of 4.9% year-on-year, notably outperforming their southern counterparts, which experienced an increase of just 2.2%.

East Anglia distinguished itself as the weakest performing region, with a modest increase of only 0.5%. Notably, within the southern region, the South West achieved the best performance with a 2.7% growth rate.

In terms of property types, Nationwide’s report indicated that terraced houses saw the largest price growth at 4.4%, followed closely by flats at 4.0%. Semi-detached homes recorded a 3.4% increase, whilst detached properties, although rising more slowly at 3.2%, have maintained a long-term edge in price performance due to a demand shift during the pandemic.

Looking forward, Gardner commented on the potential volatility in the market due to upcoming changes to stamp duty, which may lead to a surge in transactions as buyers seek to avoid additional taxes. He anticipates a spike in activity in the first quarter of 2025, followed by a likely slowdown later in the year, mirroring patterns seen after previous stamp duty modifications.

As the economy continues to recover, Gardner predicts that housing market activity could strengthen gradually, driven by improving affordability as interest rates begin to ease and earnings grow at a rate surpassing house price increases. 

In the wake of these anticipated changes, house price growth is expected to stabilise within the two to four percent range throughout 2025, once the immediate impacts of the stamp duty adjustments level out.