House prices hit a record high in January 2025, up 0.7% after dipping 0.2% in December 2024; driving average property prices to £299,138 according to the latest house price index from major lender Halifax. The average property price in January 2024 was £290,357; but January 2025 that has risen to £299,138; a 3% change year on. Northern Ireland and the North East saw the biggest change at 5.9% and 5.2% respectively; while Scotland (2.4%), Eastern England (2.7%) and Greater London (2.8%) saw the smallest year on year change.
“The UK housing market started the year on a positive note, with average prices rising by +0.7% in January, more than recovering the slight dip of -0.2% in December. This increase pushed the average property price to a new record high of £299,138. However, annual growth slowed to +3.0%, the slowest rate since last July. Affordability is still a challenge for many would-be buyers, but the market’s resilience is noteworthy. There’s strong demand for new mortgages and growth in lending. With a stamp duty increase looming, some of this demand may have come from first-time buyers eager to complete transactions before the end of March.
Said Amanda Bryden, Head of Mortgages at Halifax. Published following the Bank of England’s decision to cut interest rates to 4.5% Bryden added the latest figures indicate buyers are getting used to a new normal after low interest rates in recent years.
“Despite geopolitical uncertainties, and waning consumer confidence, other key indicators look fairly positive for the housing market. The Bank of England has made its first base rate cut of the year, and there are probably more to come. Household earnings are expected to continue outpacing inflation – albeit that gap may narrow – easing some of the financial pressure still being felt from the cost-of-living squeeze. As things stand, mortgage rates are likely to hover between 4% and 5% in 2025, influenced by both global financial markets and domestic monetary policy. Over the past year, buyers have been getting used to this new normal, understanding that rates are unlikely to return to the historical lows of 1%. But the fundamental issue in the housing market remains the lack of supply. This long-term trend, coupled with a gradual improvement in affordability, should support further modest house price growth this year.”
Estate agents are positive for the year ahead and the knock-on impact for conveyancing; and while there is acknowledgment an element of the current demand is associated with the upcoming rise in the nil-rate band, there is a sense the property market remains ‘robust’, Guy Gittins, CEO of Foxtons, says:
“The UK property market has certainly picked up where it left off last year, as the increasing momentum seen across the sales market throughout 2024 has continued to flow into the new year, further cultivating the rate of house price growth seen across the market and pushing the average house price to a record high. This has been driven by a degree of added urgency from first-time buyers keen to complete ahead of April’s stamp duty deadline, as well as a greater degree of acceptance from homebuyers of the adjustment to interest rates over time.
Market activity remains robust and it’s clear that the nation’s buyers and sellers are hitting the ground running this year. In fact, we’ve seen buyer enquiries and viewings numbers remaining consistent with the latter stages of last year. All signs currently point to a prosperous year ahead with respect to property values and those considering a sale in 2025 should be looking to list their home on the market sooner, rather than later.”
December’s numbers provide further evidence for optimism. HMRC’s latest monthly property transaction data shows seasonally adjusted (SA) residential transactions in December 2024 increased by just under 3% compared to November 2024; and the quarterly seasonally adjusted numbers (October 2024 – December 2024) were up 5.6% compared to July 2024 -September 2024. Over the year transactions were up 18.7% on 2023. Bank of England mortgages approval figures in December 2024 to 66,526 (0.7% higher than the previous month) and were up 28% on December 2023.
Meanwhile estate agency membership body Propertymark say they are seeing the impact of seasonality in its latest Housing Insight Report looking at December 2024. The report takes data from c. 100 estate and lettings agents who responded saying prospective buyer registrations and viewing both fell in December, consistent with seasonal averages. And although new properties coming to market was similarly down, with an average of 7.8 properties placed for sale per member branch in December 2024 compared with c.11 the month previously; stock levels nudged upward to 46 properties for sale per member branch, up from 44 in November 2024.
Seasonality impacted sales but as the below graph shows, they remain above 2021-2023 numbers and there is an anticipation that will rise again throughout the first few months of 2025.
Commenting on the latest report Nathan Emerson, CEO Propertymark said
“Winter is historically quieter in the sales market as people hunker down for the festive period. However, with the announcement that many will see increases in their Stamp Duty bill from April 2025, which will cost the average buyer in some cases, thousands of extra pounds, we expect there to be a noticeable shift in activity moving into 2025.”
