Soaring house prices reported by Halifax, reaching an all-time peak.
UK House Prices Reach Record High, but Growth Slows Down
In a recent development, house prices in the UK have hit a new record high of £293,999, according to Halifax. This marks a 3.9% increase over the past year and surpasses the previous peak set in June 2022.
However, the future outlook for UK house prices suggests a more cautious market. Forecasts for 2025 and beyond indicate modest growth but at a slower pace than previously expected. Estimated growth ranges between 1% (Savills, Zoopla) and 2–2.4% (Rightmove, Nationwide), down from earlier forecasts [1][2][5].
Longer-term projections indicate an average annual growth of around 2.7% between 2024 and 2028, signaling modest but steady increases [3]. The growth is concentrated in lower-price bands, with high-priced markets experiencing slower gains [5].
The improving affordability and easing mortgage conditions are contributing factors to this moderate growth. Mortgage costs are expected to fall due to a cut in the Bank rate from 5% to 4.75%, and expectations that interest rates will drift lower next year [4].
Regarding stamp duty thresholds, no concrete updates or reforms for 2025 or beyond were mentioned in the available information. The fading effects of temporary stamp duty reliefs are contributing to a normalization rather than any urgent expectation of further threshold changes [4][5].
The North West of England has the strongest growth, with an average house price of £235,587, a 5.9% increase from last year. London has the most expensive property prices in the UK, averaging £543,308, a 3.5% increase compared to last year. House prices in Wales also saw strong growth, up 5.6%, with homes now costing an average of £225,543 [6].
Scotland's average house price is now £206,480, a 1.9% increase from the previous year. The average price of a property in Northern Ireland is now £204,242. House prices rose 0.2% last month (October), marking a fourth consecutive monthly increase [7].
Official data from the Land Registry shows that property prices jumped by 1.5% in August. Despite the economic climate, the rise in house prices came as a surprise to Amanda Bryden, head of mortgages at Halifax, who commented on the unexpected growth [8].
Looking ahead, industry experts remain optimistic about the market. Guy Gittins, CEO of Foxtons, expects the heightened level of market activity to continue, with momentum strengthening as we head into 2025. Capital Economics predicts that interest rates will eventually be cut to below 4%, and annual house price growth will accelerate from around 3% in Q4 2024 to 5.0% in Q4 2025 [9].
However, some experts caution against potential headwinds. Bryden warns that new policies like higher stamp duty for second home buyers and a return to previous thresholds for first-time buyers could affect demand. The tax-free stamp duty thresholds will revert from £250,000 to £125,000 (and from £425,000 to £300,000 for first-time buyers) in April next year [10].
In conclusion, while UK house prices are expected to grow more slowly in 2025 and beyond, a stable but cautious housing market outlook prevails. The market dynamics, influenced by factors such as affordability, mortgage costs, and stamp duty thresholds, will continue to shape the housing market in the coming years.
- Moderate growth in UK house prices is expected, with interest rates influencing finance decisions for people investing in the housing-market.
- The real-estate market in the UK is projected to exhibit more modest growth, particularly in lower-price bands, but growth may accelerate due to lower interest rates forecasted for next year.
- The housing-market outlook for 2025 and beyond suggests a cautious market, with stakeholders keeping an eye on changes in stamp duty thresholds, mortgage conditions, and potential policy changes that might impact demand.
