UK house prices rise, but stamp duty changes cloud outlook
UK house prices inched closer to record highs in December, according to Nationwide, though the market is likely to see increased volatility over the next few months ahead of the introduction of new changes to stamp duty.
Nationwide reported on Thursday that UK house prices rose 0.7% over the month of December to £269,426, up 4.7% on last year, to sit just below an all-time high (£273,751) recorded in summer 2022.
The building society said there was a "clear north-south divide" in house price performance in 2024 with northern regions registering higher price growth than southern regions.
Northern Ireland was the best performing area for the second year running, with prices up 7.1% over last year in the fourth quarter, while prices in Scotland rose 4.4% over the year, increased 3.1% in England and 2.7% in Wales.
Northern England (comprising North, North West, Yorkshire and The Humber, East Midlands and West Midlands) continued to outperform southern England, with prices up 4.9% year on year, while Southern England (South West, Outer South East, Outer Metropolitan, London and East Anglia) saw a 2.2% year-on-year rise.
Robert Gardner, Nationwide's chief economist, said that the housing market "ended 2024 on a strong footing", with the number of mortgages approvals for house purchase each month rising above pre-pandemic levels towards the end of the year.
However, visibility over the first half of 2025 is clouded by upcoming changes to stamp duty, with the Stamp Duty Land Tax threshold set to reduce to just £125,000 from the current £250,000.
“Upcoming changes to stamp duty are likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax," Gardner said.
"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."