LONDON:UK house prices ended the year on a strong footing, sitting just below an all-time high, according to an index.
But stamp duty changes this spring could generate volatility,triggering a jump in house sales in early 2025, followed by a weaker period, the Nationwide Building Society predicted.
House prices increased by 4.7% annually in December, accelerating from 3.7% in November, the Society reported.
Property values increased by 0.7% month-on-month in December, taking the average house price to £269,426 ($337,090).
Robert Gardner, Nationwide's chief economist, said: "UK house prices ended 2024 on a strong footing, up 4.7% compared with December 2023,though prices were still just below the all-time high recorded in summer 2022."
The all-time high, recorded in August 2022, was £273,751.
Gardner continued: "Mortgage market activity and house prices proved surprisingly resilient in 2024 given the ongoing affordability challenges facing potential buyers.
"At the start of the year, house prices remained high relative to average earnings, which meant that the deposit hurdle remained high for prospective first-time buyers. This is a challenge that had been made worse by record rates of rental growth in recent years, which has hampered the ability of many in the private rented sector tos ave.
"Moreover, for many of those with sufficient savings for a deposit,meeting monthly payments was a stretch because borrowing costs remained well above those prevailing in the aftermath of the pandemic.
"For example, a typical mortgage rate for someone with a 25% deposit hovered around 4.5% for much of the year, three times the 1.5% prevailing in late 2021, before the Bank of England started to raise the bank rate.
"As a result, it was encouraging that activity levels in the housing market increased over the course of 2024 with the number of mortgages approved for house purchase each month rising above pre-pandemic levels towards the end of the year."
Looking ahead, Gardner said stamp duty changes from April "are likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax."
A temporary "nil rate" threshold for first-time buyers will shrink back to £300,000, from £425,000 currently. Stamp duty applies in England and Northern Ireland.— dpa
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