Nationwide have taken a look back at the housing market in 2024, and have predicted what lies ahead in the coming months – forecasting the upcoming changes to stamp duty will ‘generate volatility’.
Nationwide bosses have said that changes to stamp duty are likely to cause angst, as buyers bring forward their purchases to avoid the additional tax. A prediction that this will then 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, says the building society.
Chief Economist Robert Gardner has commented, saying that providing the economy continues to recover steadily, ‘as we expect’, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth, where the latter is likely to remain broadly in the 2-4 per cent range in 2025.
Looking back at the housing market in 2024 and what we can expect in 2025, Robert Gardner, Nationwide’s Chief Economist, comments:
“Mortgage market activity and house prices proved surprisingly resilient in 2024 given the ongoing affordability challenges facing potential buyers. At the start of the year, house prices remained high relative to average earnings, which meant the deposit hurdle remained high for prospective first-time buyers, a challenge that had been made worse by record rates of rental growth in recent years, which has hampered the ability of many in the private rented sector to save.
“Moreover, for many of those with sufficient savings for a deposit, meeting monthly payments was a stretch because borrowing costs remained well above those prevailing in the aftermath of the pandemic. For example, a typical mortgage rate for someone with a 25 per cent deposit hovered around 4.5% for much of the year, three times the 1.5% prevailing in late 2021 before the Bank of England started to raise Bank Rate.
“As a result, it was encouraging that activity levels in the housing market increased over the course of 2024. The number of mortgages approved for house purchase each month rose above pre-pandemic levels towards the end of the year. Similarly, after starting the year registering small annual declines, the pace of house growth moved firmly into positive territory, approaching 4% in November.”
Propertymark have also made comment on Nationwide’s latest prediction, saying their members have reported a non-traditional increase in interest normally seen at this time of year. Propertymark’s president says that buyers will be keen to complete their home move prior to Stamp Duty changes.
Toby Leek, NAEA Propertymark President, comments:
“Propertymark members have reported an increasing interest in property with sales higher than usual, defying the usual winter lull usually seen this time of year.
“Buyers and sellers in England and Northern Ireland are looking to complete their home move before the Stamp Duty changes commence from April 2025, and it’s expected that coupled with slow increases in affordability and wages, this spike of momentum in mortgage approvals and housing market activity will continue.
“After this spike, buyers and sellers with time on their side may then reap the rewards of a slower paced market to ensure each step of their house move is fully considered.”
