UK house prices near record high, Nationwide reports

House prices have concluded the year strongly, hovering just beneath a record peak, as indicated by Nationwide Building Society. Nationwide recorded a yearly increase of 4.7% in house prices in December, up from November’s 3.7%, across the UK. The rise in Wales was slightly more muted at just under 3%.

In Wales, the average house price rise by 2.7% over the last year to hit an average of £207,187. That compares to £269,426 in the UK as a whole.

Nationwide’s chief economist, Robert Gardner, stated: “UK house prices ended 2024 on a strong footing, up 4.7% compared with December 2023, though prices were still just below the all-time high recorded in summer 2022.” The unprecedented peak, observed in August 2022, stood at £273,751. For the latest Welsh news delivered to your inbox sign up to our newsletter

Mr Gardner added: “Mortgage market activity and house prices proved surprisingly resilient in 2024 given the ongoing affordability challenges facing potential buyers.” He also remarked on the difficulties first-time buyers faced: “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.”

Highlighting another challenge for new buyers, he continued: “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, mortgage rates shot up for borrowers with a 25% deposit, hitting around 4.5% for much of 2024 – three times the 1.5% low seen in late 2021, before interest rates started to rise.

In his analysis, Mr Gardner noted: “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.” Looking to the future, Mr Gardner expects upcoming stamp duty changes to create a stir in the market, as buyers accelerate their purchases to avoid the increased tax burden.

The changes, which come into effect in April, will reduce the “nil rate” threshold for first-time buyers from £425,000 to £300,000 in England and Northern Ireland. Mr Gardner predicts this will lead to a surge in property sales in the first quarter of 2025, particularly in March, followed by a period of slower activity in the subsequent three to six months.

(Image: Nationwide)

He explained: “This will make it more difficult to discern the underlying strength of the market.” However, provided the economic recovery remains on track, he believes the housing market will experience a steady increase in activity as modestly lower interest rates and earnings growth ease affordability concerns.

He concluded: “The latter is likely to return to the 2-4% range in 2025 once stamp duty-related volatility subsides.” Mr Gardner highlighted a “clear north-south divide” in house price performance within England for 2024, with the North East, North West, Yorkshire and Humber, and the Midlands outstripping the south with a 4.9% year-on-year increase.

In contrast, southern England, which includes the South West, Outer South East, Outer Metropolitan, London, and East Anglia, saw a more modest 2.2% rise. He further noted: “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.”

Delving into property types, Mr Gardner observed: “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.”

He concluded by reflecting on long-term trends: “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 (the first quarter of) 2020, the price of an average detached property increased by nearly 27%, while flats have only risen by (around) 15% over the same period.”

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(Image: PA Graphics/Press Association Images)

Sarah Coles, head of personal finance at Hargreaves Lansdown, commented: “Like a salad or a spin class, property price rises made an unusual appearance in December, as the looming end of the stamp duty holiday persuaded people to leave the sofa for a spot of house hunting.” She added: “At a time when affordability is under so much pressure, your deposit will make a key difference, so it pays to consider whether there’s any way you can boost it.”

Nicky Stevenson, managing director at estate agent group Fine & Country, noted: “As 2025 unfolds, the urgency of pre-April transactions may ease, potentially leading to a more balanced market.” Iain McKenzie, chief executive of the Guild of Property Professionals, remarked: “While this year is starting on a more positive foot than 2024, it will be interesting to see whether the stamp duty changes do dampen the market to some degree. Aspects such as further anticipated rate cuts should mitigate the impact, along with the economy’s continued recovery and earnings growth.”

Jeremy Leaf, a north London estate agent, observed: “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 proceedable demand.”He also mentioned: “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.”Here are the average house prices and annual increases for the fourth quarter of December, as reported by Nationwide Building Society:

Northern Ireland, £197,696, 7.1%

North East, £164,696, 5.9%

North West, £218,012, 5.5%

West Midlands, £245,173, 4.7%

East Midlands, £235,877, 4.4%

Yorkshire and Humber, £207,373, 4.4%

Scotland, £187,016, 4.4%

South West, £306,730, 2.7%

Wales, £207,187, 2.7%

The Outer Metropolitan area (including St Albans, Stevenage, Watford, Luton, Maidstone, Reading, Rochford, Rushmoor, Sevenoaks, Slough, Southend-on-Sea, Elmbridge, Epsom and Ewell, Guildford, Mole Valley, Reigate & Banstead, Runnymede, Spelthorne, Waverley, Woking, Tunbridge Wells, Windsor and Maidenhead, Wokingham), saw an average price of £422,372, a 2.4% increase.

The Outer South East (including Ashford, Basingstoke and Deane, Bedford, Braintree, Brighton and Hove, Canterbury, Colchester, Dover, Hastings, Lewes, Fareham, Isle of Wight, Maldon, Milton Keynes, New Forest, Oxford, Portsmouth, Southampton, Swale, Tendring, Thanet, Uttlesford, Winchester, Worthing) had an average price of £336,224, a 2.3% increase.

London’s average was £525,535, a 2.0% increase, and East Anglia saw an average of £272,152, a 0.5% increase. See the latest Welsh homes as they come on the market, sign up to our newsletter here.