A robust beginning to the year as property prices hit all-time highs
The housing market got off to a strong start in January, with house prices reaching new record highs.
Halifax’s House Price Index reports a +0.7% increase in house prices in January, following a slight decline of -0.2% in December. The average house price reached £299,138, marking a new peak at the start of the year.
Stamp Duty Changes on the Horizon
Amanda Bryden, head of mortgages at Halifax, commented, “The UK housing market began the year on a positive note, with average prices rising by +0.7% in January, recovering from the small dip of -0.2% in December. This increase pushed the average property price to a record high of £299,138, though annual growth slowed to +3.0%, the slowest rate since last July.”
Bryden also noted that upcoming changes to stamp duty in April could lead to a surge in first-time buyers. She added, “While affordability remains a challenge for many potential buyers, the market’s resilience is impressive. There is strong demand for new mortgages and an increase in lending. The looming stamp duty changes may have prompted some first-time buyers to rush transactions before March.”
“Despite global uncertainties and declining consumer confidence, other indicators for the housing market remain relatively positive. The Bank of England has cut the base rate for the first time this year, with further cuts likely.”
Northern Ireland Leads in Property Price Growth
The Halifax House Price Index shows that Northern Ireland continues to experience the strongest annual property price growth in the UK, though the growth slowed to +5.9% in January, down from +7.3% in December. The average property price in Northern Ireland is now £205,473.
Wales saw a +3.6% rise in house prices, with the average property now costing £227,397.
Scotland had a lower price increase compared to the rest of the UK, with properties now worth an average of £210,690, reflecting a +2.4% increase from the previous year.
In England, the North East has overtaken the North West for the highest annual property price growth, rising by +5.2%, with the average price now £178,696. This is the first time since September 2023 that the North West hasn’t led the table for annual growth in England.
London continues to have the highest average house price in the UK at £548,288, up +2.8% from last year.
Ongoing Supply Shortage
Ms. Bryden cautioned that the ongoing lack of supply in the housing market will continue to be a challenge in the coming months. “Mortgage rates are expected to remain between 4% and 5% in 2025, influenced by both global financial markets and domestic policy. Buyers are adjusting to this new normal, accepting that rates are unlikely to return to the historically low levels of 1%,” she said.
“However, the core issue remains the supply shortage. This long-term trend, combined with gradual improvements in affordability, should help sustain modest house price growth this year.”
