UK House Prices Surge 4.7% in 2024 Amidst Affordability Challenges

In 2024, UK house prices rose by 4.7%, marking a year-end average cost of £269,426, although still below the peak from summer 2022, as reported by Nationwide. Despite challenges around affordability for buyers, the housing market displayed resilience. The fastest price growth was observed in terraced homes, while Northern Ireland saw the most significant increases, particularly outpacing growth in southern regions.

Significant changes to stamp duty set for April 2025 will likely complicate matters for buyers, as properties over £125,000 will incur tax compared to the current threshold of £250,000. First-time buyers will also see a drop in the no-stamp duty threshold from £425,000 to £300,000, creating additional financial barriers at a time when raising deposits is already tough amidst record rental growth.

Experts, like Nationwide’s chief economist Robert Gardner and financial planner Holly Tomlinson, highlight that while falling mortgage rates and rising wages could improve affordability, many young buyers may still struggle, especially with anticipated future expenses related to stamp duty. However, UK Finance predicts a 10% increase in mortgage lending for house purchases in 2025, although some analysts view this as overly optimistic. Furthermore, a significant segment of mortgage holders with fixed-rate deals will see their payments rise considerably when these deals expire in the coming years, complicating the forecast for buyers and homeowners alike.

Overall, the housing market in the UK remains under strain due to economic uncertainty surrounding interest rates and evolving regulations, creating an unpredictable environment for prospective buyers and sellers.