2 January 2025
If you are covering the latest Nationwide House Price Index, please see the following comment from Holly Tomlinson, financial planner at Quilter:
"The Nationwide House Price Index for December shows house prices have ended the year remarkably well given the economic circumstances of the last 12 months. Historically, December often sees house prices soften as reduced buyer activity and the distraction of the festive period take hold. However, this year’s data suggests there has been a 0.7% increase offering an insight into the state of the market as we close 2024.
"On an annual basis, prices grew by 4.7% demonstrating a level of resilience despite the headwinds of higher borrowing costs and affordability pressures. Strong employment levels, easing inflation, and improving mortgage rates have helped sustain demand, particularly in more affordable regions. December’s data provides tentative evidence that the market is adapting to the ‘new normal’ of higher but stabilising interest rates.
"First-time buyers remain a critical part of the market, but affordability challenges are hitting them particularly hard. The combination of elevated house prices, higher borrowing costs compared to a few years ago, and persistent inflation means saving for deposits remains a significant hurdle. The looming changes to stamp duty, due to come into effect on 1 April 2025, are likely to make purchasing even more difficult for this group, adding further costs at a time when every penny counts.
"The struggles of first-time buyers have a ripple effect across the housing market. Without this crucial cohort entering the ladder, the market risks becoming ‘glued up,’ as chains stall and transactions slow. Existing homeowners looking to sell and move up the ladder rely on the activity of first-time buyers to create liquidity at the entry level, and their absence could further dampen broader market recovery.
"Looking ahead to 2025, the outlook is cautiously optimistic, but challenges persist. The Bank of England’s predicted future base rate cuts are expected to gradually ease the cost of borrowing, providing some support to demand. Wage growth, coupled with these lower rates, could help lift buyer sentiment further in the coming months. However, this will only go so far without targeted measures to ease the burden on first-time buyers and reignite activity at the lower end of the market.
"For those considering property moves, 2025 presents an opportunity to re-evaluate plans. While the signs of market stabilisation are encouraging, uncertainty remains, and careful financial planning will be key to navigating what could still be a challenging year."
