"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."
- Robert Gardner - Nationwide
The latest data released this morning by Nationwide has shown that the end of 2024 was very different to the beginning of the year.
According to the data, UK house prices were up 4.7% year on year in December, with Northern regions seeing higher price growth than southern regions. Northern Ireland was the best performing area for the second year running, with prices up 7.1% over 2024 and East Anglia was found to be the weakest performing region, with prices edging up by a marginal 0.5% over the year.
“UK house prices ended 2024 on a strong footing." commented Robert Gardner, Nationwide's Chief Economist, who added "Though prices were still just below the all-time high recorded in summer 2022. House prices increased by 0.7% month on month, after taking account of seasonal effects, following a 1.2% rise in November.
Looking back on 2024
Gardner comments: “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 per cent 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.
Where next in 2025?
Gardener continues: “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.
All regions saw house price growth in 2024
“Our regional house price indices are produced quarterly, with data for Q4 (the three months to December) indicating 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.
Property type review
“Our most recent data by property type reveals that terraced houses have seen the biggest percentage rise in prices over the last year, with average prices up 4.4% in 2024.
“Flats saw a recovery in price growth, recording their best year since 2021, with a 4.0% rise. Semi-detached properties recorded a 3.4% annual increase, while detached properties saw a 3.2% year-on-year rise.
“However, if we look over the longer term, detached homes have continued to have a slight edge over other property types, most likely due to the ‘race for space’ seen during the pandemic. Indeed, since Q1 2020, the price of an average detached property increased by nearly 27%, while flats have only risen by c15% over the same period.”
Nathan Emerson, CEO of Propertymark said: “With a degree of uncertainty still looming regarding borrowing rates and affordability, alongside rises to Stamp Duty for buyers in England and Northern Ireland commencing from April 2025, many people are extremely keen to move sooner rather than later, defying the usual winter lull normally seen this time of year.
“However, once the dust has settled following the anticipated rush heading towards April, buyers and sellers may reap the rewards of a slower-paced market which may allow opportunities for greater negotiation on price from both buyers and sellers.”
Tomer Aboody, director of specialist lender MT Finance, says: “As 2024 came to a close, sentiment remained pretty strong.
“We have seen an increase in prices year-on-year, mostly due to the rate cuts which have made affordability easier and in turn, have brought more buyers and sellers back into the fold. Higher transaction levels have also made the market more buoyant.
“With the stamp duty concession ending in March, 2025 as a whole might not be as positive as everyone hopes but another rate cut early in the year could help ease any pain.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Prices have been stronger for cheaper properties and areas but overall more choice has prompted a better balance between supply and not just demand but increasingly proceed-able demand.
"Boxing Day was a good example – a much lower proportion than usual of nosy neighbours as buyers and sellers come to terms with the new normal; interest rates unlikely to fall quickly any time soon whereas wage rises are still exceeding inflation.
“We expect this pattern of sales progressing slowly to exchange with little or no renegotiation or fall through to continue with first-time buyers desperately trying to take advantage of the stamp duty concession before the beginning of April."
