House prices fell slightly in December but grew by 3.3% over the year in 2024, according to the latest Halifax House Price Index.
The drop in the average UK house price by 0.2% in December came following five monthly increases in a row.
Even with this seasonal ‘blip’, which is expected in December, the typical price of a property in the UK is now £297,166.
Amanda Bryden, head of mortgages for 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.”
In line with many other property market commentators, Bryden is predicting changes to the stamp duty thresholds in March will impact the market in the early part of 2025.
This, said Bryden, has already given prospective first-time buyers ‘even greater motivation’ to get on the housing ladder and bring any home-buying plans forward. But she still thinks there will be challenges ahead.
“While the housing market has been supported in recent months by falling mortgage rates, income growth and the announcement on upcoming Stamp Duty policy changes, mortgage affordability will remain a challenge for many, especially as the Bank Rate is likely to come down more slowly than previously predicted,” she said.
“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.”
Karen Noye, mortgage expert at Quilter, was also concerned the stamp duty changes will have a negative effect on those first-time buyers who purchase after the deadline. And this, she warned, will filter through to other buyers.
“For first time buyers, the impact will be keenly felt,” she said. “Not only will the stamp duty threshold decrease from £425,000 to £300,000, which could mean they go from paying nothing to paying up to £6,250 in stamp duty, but the maximum purchase price first time buyers’ relief can be claimed on will fall to £500,000 from the current level of £625,000.
“This will no doubt make taking the first step onto the property ladder even more challenging, particularly for those living in areas of the country with higher average house prices.
“First time buyers are a critical element of the housing market, but piling on additional affordability pressures at a time when purchasing a first home is already extremely difficult means we could see a reduction in such purchases.
“This would not only be disappointing news for those who had hoped to take that first step, but it would also likely ripple across the market and we could see a ‘gluing up’ effect if chains stall and transactions slow as a result.”
