15 January 2025
If you are covering UK Government House Price Index, please see the following comment from Karen Noye, mortgage expert at Quilter:
"The latest UK House Price Index reveals that the average price of a UK property stood at £290,000 in November 2024, representing an annual increase of 3.3%. While this is a £10,000 rise compared to a year ago, it highlights a market grappling with affordability challenges. On a monthly basis, prices dipped by 0.4%, reflecting seasonal cooling and the broader pressures on household finances.
"Regionally, England's average house price increased by 3.0% year-on-year to £306,000, while Wales matched this growth at £219,000. Scotland led the way with a 4.7% rise to £195,000, and Northern Ireland continues to show resilience, with an annual increase of 6.2% to £191,000 as of Q3 2024.
"Despite these annual gains, the monthly decline may signal early signs of buyer hesitation amid broader economic uncertainty. This uncertainty will be compounded by the recent turmoil in the bond markets putting upward pressure on mortgage rates. This dynamic is likely tempering demand, particularly among first-time buyers already stretched by rising living costs and tighter lending criteria.
"Limited housing stock continues to support prices though, even as affordability pressures weigh on prospective buyers. For now, the housing market remains a balancing act between economic headwinds and structural supply constraints.
"As we look ahead, the anticipated base rate cuts in 2025 could provide some relief to borrowers, but the extent of this impact will depend on how the Bank of England responds to the ongoing bond market volatility. Regardless affordability challenges are very unlikely to dissipate entirely, especially if supply remains restricted and inflation continues to erode disposable incomes. For many first-time buyers, these headwinds will persist as significant barriers to homeownership.
"In the coming months, attention will also turn to the re-referencing of the UK HPI to January 2023. While this will not alter inflation rates, it will better reflect the types of properties currently being sold and may provide a more accurate picture of market dynamics in future reports."
