7 January 2025
If you are covering the latest Halifax House Price Index, please see the following comment from Karen Noye, mortgage expert at Quilter:
“Despite the challenges it faced throughout 2024, the housing market ended the year looking considerably stronger than many might have anticipated 12 months ago.
“December is typically a quiet month while the festivities take centre stage, and other plans such as moving home are put on the back burner. This was reflected in this morning’s Halifax House Price Index with a slight 0.2% decrease in house prices in December. However, on a quarterly basis prices were still up 1.4%, and on an annual basis, prices rose by a solid 3.3%.
“This annual growth is indicative of a remarkable level of resilience within the housing market. It has battled ongoing headwinds of high borrowing costs and affordability pressures for a long while now, yet demand seems to have been sustained and the market may even now be adjusting to the ‘new normal’ of higher but more stable interest rates.
“2025 will not be without its own fair share of challenges, however, and the changes to stamp duty, which are due to come into effect in April, could weigh heavily. For home movers, the current stamp duty threshold of £250,000 will halve to its previous level of £125,000, meaning the process will become even more costly.
“For first time buyers, the impact will be keenly felt. 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.
“In addition, the Bank of England looks unlikely to make any drastic changes to the base rate, so while mortgage rates are expected to ease, it will be only gradually. Nonetheless, the prospect of even slightly lower rates could be enough to help prop up demand for now.
"For those looking to move home or buy their first property in 2025, it will be key to seek professional financial and mortgage advice to ensure you make the best possible decisions based on your circumstances and goals.”
