Wednesday, January 8, 2025

UK house prices drop for first time in nine months

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UK house prices fell in December 2024 for the first time since March as housing experts expect sales to increase over the next few months, ahead of stamp duty changes.

The average house cost £297,166, down by 0.2% from November, following five consecutive monthly increases, according to Halifax. On an annual basis, prices were up 3.3%, down from 4.7% growth in November.

Northern Ireland showed the strongest annual house price growth in the UK, up 7.4%, to an average of £205,895.

House prices in Wales were up 4.6% year-on-year, with properties costing £226,646, on average. In Scotland, the annual rate was lower than in the rest of the UK, 2.4% to an average £209,959.

London retained the highest average house price across the country, at £547,614, up 3.3% year on year.

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Amanda Bryden of Halifax said: “The housing market was broadly steady at the start of 2024, with house price growth taking off from the summer onwards.

“In the latter half of the year, house prices grew in response to the falls in mortgage rates, alongside income growth, both leading to financial pressures somewhat easing for buyers.”

She said changes to stamp duty from April, which will see the “nil rate” band for first-time buyers shrink from £425,000 to £300,000, have given prospective first-time buyers more motivation to get on the housing ladder and bring any home-buying plans forward. Stamp duty applies in England and Northern Ireland.

In London, only 8% of homes for sale will be stamp-duty free for first-time buyers from April. Some 24% will be stamp-duty free in the south-east, and 32% in the east of England.

Looking to 2025, Bryden said: “Mortgage affordability will remain a challenge for many, especially as the [Bank of England base rate] is likely to come down more slowly than previously predicted.

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“However, providing employment conditions don’t deteriorate markedly from a more recent softening, buyer demand should hold up relatively well and, taking all this into account, we’re continuing to anticipate modest house price growth this year.”

Despite the slowdown, Matt Thompson, head of sales at the estate agent Chestertons, said: “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 but also by second-steppers, including young families, wanting to upsize.”

Ashley Webb, UK economist at Capital Economics, said: “The 0.2% m/m fall in the Halifax house price index in December is at odds with the 0.7% m/m rise in the Nationwide measure and suggests that recent rises in mortgage rates may have started to weigh on the housing market at the end of last year a bit more than previously thought.

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