800, 000 £ 1, 173, 152 - 6. 8%
648 £ 38. 9b n 15, 405 M ORTGAGE AP P ROVALS (NOV)
NEW YEAR, RESILIENT MARKET
The housing market has begun the year in a strong position with high levels of choice and a strong sales pipeline. Modest price growth is expected to continue through 2025, however realistic pricing will remain key.
ROBUST PRICES
The housing market has proved remarkably resilient in 2024, with prices defying predictions made at the start of the year. The average price of a property reached £269,426 in December, up 4.7% year-on-year, the strongest level of growth since October 2022 (Nationwide). In a housing market where every penny is important, more affordable areas performed the best. The largest annual growth in Q4 2024 was in Northern Ireland (7.1%), followed by the north (5.9%) and the West Midlands (4.7%). More expensive areas were slower, London had a 2% rise and the southeast 2.3%. Rightmove predicts that new seller asking prices will rise by 4% next year.
Across the prime markets of England and Wales the average price of a property is £1,173,152, down -6.8% from the same time last year.
ECONOMIC OUTLOOK
In the December meeting, the Bank of England held interest rates steady at 4.75% after it was revealed that inflation in November reached 2.6%, above the central bank’s target. Despite this, a recent survey of economists expected interest rates to be cut at least four times in 2025. However, financial markets are currently pricing in just two rate cuts for 2025. Policymakers will face pressure to balance concerns over slowing economic growth, with most economists anticipating inflation to stay between 2.5% and 3.5% throughout 2025. Interest rate cuts should have a knock on effect on mortgage rates, improving affordability and stimulating market activity.
HIGHER FOR LONGER
Mortgage rates remained higher for longer than many expected in 2024, making borrowing more expensive for the two thirds of buyers who rely on home loans to purchase property*. The average two-year fixed rate mortgage is currently 5.48%, not much lower than 5.93% a year ago. Five-year fixed rate deals have only crept down too, from 5.55% to 5.25%*. With mortgage rates slightly elevated, buyers remain cautious and pricing correctly remains key. Almost one million property price reductions were recorded throughout 2024, the largest number on record. This number is 8.1% higher than in 2023 and 17.6% higher than in 2019 (TwentyEA).
SALES PIPELINE
There were 65,720 mortgage approvals in November, up 31% year-over-year (Bank of England). Over half (51%) of agents think that buyer confidence is improved compared to three months ago*. With rising confidence, new buyer demand up by 13% year-on-year (Rightmove).
The housing market finished 2024 strongly, with more sales being agreed ahead of the stamp duty deadline. Buyers and sellers re-entered the market in 2024 after postponing moving decisions due to higher mortgage rates. An increase in homes available for sale boosted choice, leading to the number of sales agreed being 22% higher than the same time last year (Rightmove). Looking ahead, there are 283,000 sales worth £104 bn progressing their way towards completion in the first half of 2025, the largest pipeline in four years and a rise of 30% compared to last year (Zoopla).
*The Times annual survey of economists, The Times, Moneyfacts, Dataloft (PriceHubble) poll of subscribers
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£800,000
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