Another jump in house prices puts the UK property sector on track for a better than expected end to 2024, with strong momentum predicted to carry the market through 2025.
UK property prices jumped for the fifth month in a row according to the latest data from Halifax, with a 1.3% month-on-month rise bringing prices up to £298,083. This is a record high, with prices last peaking in June 2022, at £293,507.
It represents acceleration in the housing market as the year comes to a close, which has been spurred on by numerous factors from improving mortgage rates, a more stable political outlook, and improving affordability thanks to strong wage growth.
Many buyers now have an even greater incentive to complete purchases in the early months of 2025, as the current stamp duty threshold of £250,000 is set to revert to £125,000 from April next year, which could make the property tax bill higher for many buyers. The first-time buyer threshold will also reduce from £425,000 to £300,000.
Market confidence has climbed over the course of 2024 after a slower 2023, and major forecasts are expecting continued growth in 2025 and beyond as appetite for UK property from homebyuyers and investors rises.
North West continues to lead
The North West of England continues to surpass the rest of England when it comes to house price growth, with Halifax’s figures showing a huge 5.9% rise in house prices, compared with the UK property market average of 4.8%. Properties in the region now cost an average of £237,045, says the lender, making it one of the more affordable parts of the country.
Strong house price growth was also recorded in the West Midlands, with a 5.5% increase from last year. Prices in this part of the country are slightly higher, at £257,982, but remain below the UK average, meaning it is a popular location for property investors looking for lower price points, and first-time buyers who are priced out of the south.
London has also seen a rise in property prices, albeit at a lower pace than the UK average. It recorded a 3.5% annual increase, bringing the average house price in the capital to £545,439.
The prime UK property market – including London – is forecast to see slower overall growth in prices than the mainstream market, which is partly due to the fact that there are fewer needs-based buyers operating in the top-priced sector.
UK property momentum grows
Markers for UK property market growth are all on an upwards trend at the moment, according to the Halifax report, signalling growing momentum among sellers and buyers.
The latest HMRC transaction data shows that UK seasonally adjusted residential transactions in October 2024 totalled 100,410 – up by
9.5% from Septembers figure of 91,690 (up +17.5% on a non-SA basis). Quarterly data also showed a 3% rise, while year-on-year sales were 21% higher in October this year.
Mortgage approvals have also been on the rise, according to Bank of England figures, demonstrating a renewed appetite for pushing ahead with purchases, as buyers make the most of the reduced rates.
Agreed sales and new buyer enquiries in the UK property sector have both increased according to the Royal Institute of Chartered Surveyors (RICS), with a net monthly rise of 12% in buyer interest in October, with net agreed sales up 9%. New instructions also saw a 14% boost.
A strong end to the year in sight
Nicky Stevenson, managing director at national estate agent group Fine & Country, said: “The housing market continues to show strong growth despite challenges from the Autumn Budget and inflation, with resilience fuelling hopes for a strong year-end finish.
“Market activity typically slows at this time of year as buyers rush to finalise moves before Christmas or pause their plans to focus on the festive season. However, this rise in house prices — both monthly and year-on-year — suggests a shift, with many buyers forging ahead.
“This surge may be driven by a desire to complete transactions ahead of the tax increases announced by the Chancellor in October. Nationwide’s November House Price Index confirms this trend, showing the fastest annual price growth in two years at 3.7%.
“One key change impacting homebuyers is the adjustment to stamp duty, coming in April 2025. The current £250,000 threshold for home movers will revert to £125,000, while the first-time buyer exemption will drop from £425,000 to £300,000.
“It’s not uncommon to witness a flurry of activity following shifts in policy or economic indicators, as those impacted make quick decisions to mitigate potential costs. However, looking forward, tax increases following the Budget could weaken buyer purchasing power, and economic uncertainty has caused some of the most competitive mortgage rates to vanish.
“While tax increases and rising prices — with inflation now sitting at 2.3% — may prompt some consumers to tighten their belts in the new year, experts remain optimistic about the housing market’s trajectory. Zoopla forecasts a 2.5% rise in house prices and a 5% increase in transactions by 2025. First-time buyers are expected to be a key driver of this growth, supported by improving affordability from higher incomes and lower mortgage rates.
“With these factors in play, the UK property market enters 2025 with renewed momentum and a positive outlook, signalling continued growth despite headwinds.”
Buyers ‘shrugging off’ headwinds
Rachael Hunnisett, director of April Mortgages, said: “The UK property market’s hot streak goes on as it records its fifth consecutive month of growth, demonstrating the industry’s resilience to change.
“Prices are rising at their fastest annual rate for two years, supported by a steady increase in mortgage approvals.
“Borrowers have shrugged off last month’s spike in inflation and the recent Budget uncertainty to press ahead with their homebuying plans.
“Although market activity often slows in the run up to Christmas, the signs point to a busy winter period as homeowners rush to beat April’s stamp duty deadline.
“Over the longer-term, homeowners’ ability to move up the property ladder will rest on the direction of interest rates.
“Despite two rate cuts by the Bank of England this year, they remain well above their long-run average and with house prices creeping back up, affordability pressures could continue to bite.
“The longer the current economic uncertainty goes on, the harder borrowing decisions will become for homeowners, who should avoid making assumptions based on speculation.
“Our advice is to speak to a professional mortgage advisor and think about how much risk you are comfortable with before choosing the right mortgage deal.”
If you’re looking to get ahead of the UK property market, get in touch with BuyAssociation today to find out about our current and upcoming UK property investment opportunities.