As we move towards the New Year, the UK residential property market as at December 2024 has shown notable resilience and growth, despite a year marked by economic uncertainties.
House prices rose by 1.2% in November, bringing the annual growth rate to 3.7%, the fastest since March 20221. This growth is attributed to several factors, including lower mortgage rates and increased buyer confidence following the General Election in July1.
Market activity has been robust, with the number of completed transactions in October exceeding the pre-pandemic average by 3%. This surge in activity is partly due to the Bank of England's decision to cut the base rate in August, which led to a reduction in mortgage interest rates. However, uncertainty ahead of the October Budget caused a temporary pause in the market as buyers and sellers awaited the new government's economic direction.
The reinstatement of lower stamp duty thresholds from April 2025 has seen greater activity in the last quarter of 2024 and is expected to boost transaction completions in the first quarter of the new year, as buyers rush to complete purchases before the deadline.
Economic indicators for 2025 are mixed as inflationary risks remain, particularly around energy prices. The changes in employer NI contributions from April 2025 is also causing concerns with many businesses looking to cut staffing numbers and raise prices in order to maintain viability.
Mortgage rates are expected to continue falling during 2025, albeit gradually, particularly if growth is minimal and inflation rises to far ahead of the Bank of England’s target of 2%. The pace of interest rate cuts by the Bank of England will be a critical factor in determining the housing market's strength throughout the year.
Population growth, driven by higher-than-expected net migration, is also influencing the market. This increase in demand is most immediately felt in the rental sector but has broader implications for house prices and the need for increased housebuilding which, despite the Labour Government’s rhetoric and aggressive plans for planning changes, will take time to result in more property being available.
Massive legislative changes in the rental sector that will likely come into effect in mid-2025 are creating a mixture of optimism and fear amongst landlords with many reviewing plans for their property assets ahead of changes becoming law.
Our recent landlord seminar saw a packed room with questions about the proposed Renters Rights Act dominating the agenda. We will be holding another event early in the New Year.
Overall, the UK residential property market in December 2024 is characterised by steady pricing, robust transaction volumes, and a cautiously optimistic outlook for 2025.
May the team and i take this opportunity to wish you a very Merry Christmas and New Year. And we look forward to being of service to you in 2025.
Yours
Darren Murphy.
