The UK residential property market has shown a mix of resilience and cautious optimism. Early indicators suggest that housing market activity in the first month of the year was around 13% higher than the same time last year, building on the momentum seen during the final months of 2024. This uptick in activity is partly due to mortgage approvals returning to pre-pandemic norms, as reported by the Bank of England.
In addition the forthcoming end of stamp duty discounts (March) has seen some last minute activity.
House price growth has been modest but steady. Nationwide reported that annual levels of mainstream house price growth softened in January, with a 4.1% increase compared to 4.7% in December 2024. Halifax, on the other hand, recorded a more pronounced monthly increase of 0.7%, with annual growth reaching 3%, pushing the average UK property price to a new peak of £299,138. However, regional disparities remain stark, with the north-east experiencing the most robust growth at 5.2% year-on-year, nearly double the rate of London’s price appreciation.
The prime housing market, particularly properties over £1 million, saw activity levels 10% higher than 12 months ago, despite being more exposed to a higher tax environment post-Budget. The rarefied market over £5 million in London also experienced an uptick in activity in the final quarter of 2024 following more subdued activity earlier in the year.
Interest rates and mortgage regulation have been significant factors influencing the market. The Bank of England's recent decision to cut the base rate to 4.5% marks a significant shift in monetary policy, aimed at preventing the economy from entering a recession. This move is expected to increase the range of buyers and their buying power over the year. Additionally, there has been speculation about further relaxation of mortgage regulation, which could amplify this effect.
The private rental market has also seen changes, with the Renters’ Rights Bill making significant parliamentary progress. This is taking place against a backdrop of relatively low single-digit annual rental growth, with the RICS reporting relatively flat tenant demand.
The changes that will be brought about by the new lettings legislation will be very wide reaching and, at Christopher Nevill we have been communicating with our landlords and keep them abreast of the proposed changes.
Ahead of the new proposals becoming law we will ensure that all of our landlords and tenants continue to have the peace of mind of knowing that their properties are in safe hands and are legally and safety compliant.
Overall, the UK residential property market is characterised by cautious optimism. While house price growth has been modest, the market has shown resilience, with increased activity levels and a more favourable interest rate environment. However, regional disparities and the potential impact of further mortgage regulation changes remain key factors to watch in the coming months.
Yours
Darren Murphy
