UK house prices ended the year up 4.7% year on year in December, according to Nationwide’s latest House Price Index, with northern regions seeing stronger price growth than southern areas.
The average price of a property in the UK stood at £269,426 in December, up 0.7% compared to November. Prices are only slightly lower than the all-time high recorded in summer 2022.
The building society said that both mortgage market activity and house prices had proved “surprisingly resilient” in 2024, with the number of mortgages approved for house purchases each month rising above pre-pandemic levels at the end of the year. This is despite the many challenges that buyers faced last year, including steep rental prices and difficulties saving a deposit.
Robert Gardner, chief economist at Nationwide, said: “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.”
House prices rise in all regions
Property prices rose in all areas of the UK, Nationwide said, with Northern Ireland taking the top spot for the highest house price growth for the second consecutive year. It saw house prices rise 7.1% in 2024, compared to 4.4% in Scotland, 2.7% in Wales and 3.1% in England.
Mr Gardner said: “There was a clear north-south divide inhouse 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.”
The best performing region in the South was the South West, with annual price growth of 2.7%. East Anglia was the worst performing Southern region, with a 0.5% annual increase in prices.
Looking ahead to 2025
Stamp duty changes which will mean steeper costs for buyers from April are likely to result in house price volatility in the first few months of the year, according to Nationwide. It expects a jump in transactions between January and March, followed by a period of weakness in the next three to six months.
“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,” Mr Gardner said. “The latter is likely to return to the 2-4% range in 2025 once stamp duty related volatility subsides.”
