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UK house prices ended 2024 on a positive note, with a 4.7% year-on-year increase in December, according to the latest Nationwide House Price Index. The rise reflects resilience in the market despite affordability challenges and higher borrowing costs.
House prices rose 0.7% month-on-month in December, following a 1.2% increase in November (seasonally adjusted). Historically, December often sees a slowdown in activity due to the festive period, but the market defied expectations this year.
“While prices remain below the all-time high recorded in summer 2022, December’s performance shows that the market is adapting to the ‘new normal’ of higher but stabilising interest rates," Nationwide (NBS.L) chief economist Robert Gardner said.
The market’s resilience can be attributed to easing inflation, improving mortgage rates, and strong employment levels, Gardner said.
Mortgage rates hovered around 4.5% in 2024 — significantly higher than pre-pandemic levels.
Read more: What will happen to interest rates in 2025?
"House prices grew by 4.7% annually, demonstrating a level of resilience despite the headwinds of higher borrowing costs and affordability pressures," Quilter financial planner Holly Tomlinson said.
Regional disparities
Regional disparities highlighted a continued north-south divide in house price performance.
Northern Ireland was the best-performing region for the second consecutive year, with house prices rising by 7.1% over 2024, according to Nationwide data. Scotland and Wales also saw solid growth, with prices up 4.4% and 2.7%, respectively.
In England, Northern regions outpaced their Southern counterparts. Northern England, comprising areas such as the North West, Yorkshire & The Humber, and the Midlands, saw a 4.9% annual increase. The North was the standout English region, with prices up 5.9%. In contrast, Southern England, including the South West, London, and East Anglia, recorded a more modest 2.2% rise, with East Anglia lagging at just 0.5%.
"The north-south divide in house price growth remained pronounced in 2024, with more affordable regions in the North continuing to outperform the South," Gardner said. "The resilience in Northern Ireland and Scotland reflects their relatively lower average house prices and strong local demand."
Policy impacts and outlook for 2025
Upcoming changes to stamp duty in April 2025 are expected to influence market dynamics in the near term. Buyers may rush to complete transactions before the tax increase, leading to a spike in activity in early 2025, followed by a slowdown later in the year.