31 January 2025
If you are covering the latest Nationwide House Price Index, please see the following comment from Karen Noye, mortgage expert at Quilter:
“In the first month of 2025, the Nationwide House Price Index has shown that there has been only a modest month on month increase in house prices. However, the annual rate of house price growth slowed to 4.1% in January, compared with 4.7% in December highlighting the market's continued vulnerability. Strong employment levels, easing inflation, and better mortgage rates have kept demand steady, especially in some areas but this softening shows affordability is still having an impact.
“Many first-time buyers have, in recent weeks, been scrambling to get their property sales motoring ahead of the stamp duty rules changing in April. This might bloat prices in weeks to come as people lock in deals in the hope, they can avoid higher taxes. Buyers just need to not let the tail wag the dog and end up paying over the odds for a property, ending up in a similar or worse position than if they had just bided their time and suffered a larger tax bill.
“For most, though, it is now too late, and people will struggle to get a house purchase through before the rule change. Given how much affordability is stretched for first-time buyers, this is yet another blow to those looking to get on the housing ladder.
“Recent announcements that there may be a removal of mortgage red tape with an aim to improve affordability for first-time buyers are welcome. High house prices, increased borrowing costs, and persistent inflation make saving for deposits a real struggle.
“Chancellor Rachel Reeves has backed plans by the FCA to examine ways of allowing more mortgage risk-taking by banks to help more people own their own homes. The difficulties for first-time buyers have a knock-on effect across the housing market. Without them, the market risks becoming ‘glued up,’ with chains stalling and transactions slowing down. Existing homeowners looking to sell and move up the ladder rely on first-time buyers to keep things moving.
“Looking ahead, 2025 has a cautiously optimistic outlook, but there are still challenges. The Bank of England’s expected base rate cuts should gradually lower borrowing costs, which could support demand. Wage growth, along with these lower rates, might boost buyer sentiment in the coming months. However, targeted measures to help first-time buyers will be crucial to reigniting activity at the lower end of the market, which continues to be blighted by affordability concerns.
“For those thinking about moving, 2025 is a good time to reassess plans. While the signs of market stabilisation are encouraging, there’s still some uncertainty, and careful financial planning will be key to navigating what could be a tricky year.”
