UK House Prices Drop for First Time in Nine Months

According to recent data from Halifax, the average UK house price fell by 0.2% in December 2024, marking the first monthly decline since March. This decrease comes on the heels of five consecutive monthly increases. Despite this slowdown, housing experts predict that sales will increase over the next few months ahead of stamp duty changes.

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House Price Growth Across the UK

The average house price in Northern Ireland showed the strongest annual growth in the UK, increasing by 7.4% to £205,895.
Wales saw a year-on-year rise of 4.6%, with properties costing an average of £226,646.
In Scotland, the annual rate was lower than in the rest of the UK, at 2.4%, with an average house price of £209,959.
London retained its position as having the highest average house price across the country, at £547,614, up 3.3% year on year.

Stamp Duty Changes and their Impact

Amanda Bryden from Halifax noted that the changes to stamp duty from April will see the ‘nil rate’ band for first-time buyers shrink from £425,000 to £300,000. This has given prospective first-time buyers more motivation to get on the housing ladder and bring any home-buying plans forward.

Stamp Duty Exemptions Across Regions

Only 8% of homes for sale in London will be stamp-duty free for first-time buyers from April.
In the south-east, 24% of homes will be exempt from stamp duty.
The east of England has the highest percentage of stamp-duty-free homes for first-time buyers, at 32%.

Looking Ahead to 2025

Bryden stated that mortgage affordability will remain a challenge for many in 2025, especially as the Bank of England base rate is likely to come down more slowly than previously predicted. However, providing employment conditions don’t deteriorate markedly from a recent softening, buyer demand should hold up relatively well.

Buyer Demand and Market Expectations

Despite the slowdown, Matt Thompson from Chestertons said that December 2024 was one of the busiest Decembers in years in terms of buyer demand. This was driven by first-time buyers who were keen to get on the property ladder before this year’s changes to stamp duty, as well as second-steppers and young families wanting to upsize.

Market Insights from Experts

Ashley Webb from Capital Economics noted that the 0.2% monthly fall in the Halifax house price index is at odds with the 0.7% monthly rise in the Nationwide measure. This suggests that recent rises in mortgage rates may have started to weigh on the housing market more than previously thought.