House prices rose by 4.7% on an annual basis in December, according to major lender Nationwide, finishing the year in a position of strength. This marks a significant recovery from the year before, when prices fell by 1.8%.
The growth was not evenly distributed across the country, though. Northern regions saw greater house price growth than southern regions, where affordability is more stretched due to higher prices.
Northern Ireland was the best-performing area for the second year in a row, with prices up 7.1% in 2024, Nationwide said. Meanwhile, East Anglia was the weakest region with prices up a meagre 0.5% in 2024.
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On a monthly basis, UK house prices rose by 0.7% in the month of December following a 1.2% rise in November.
Nationwide’s chief economist Robert Gardner said house prices ended the year “on a strong footing”, despite coming in “just below the all-time high recorded in summer 2022”. Gardner called the resilience surprising, given the ongoing affordability challenges faced by buyers.
He added: “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 has been made worse by record rates of rental growth in recent years, which has hampered the ability of many in the private rented sector to save.”
Higher mortgage rates have also pushed up borrowing costs for first-time buyers and those coming to the end of a fixed-rate period, making it more difficult to get onto the housing ladder or climb the next rung.
Where did house prices rise the most in 2025?
All regions saw price rises over the course of 2024, but there were significant disparities in the rate of growth. Northern Ireland (7.1%) and Scotland (4.4%) saw greater growth than England (3.1%) and Wales (2.7%). There were large variations among the English regions too.
“There was a clear north-south divide in house price performance in 2024 as Northern England (comprising North, North West, Yorkshire & The Humber, East Midlands and West Midlands) continued to outperform southern England, with prices up 4.9% year on year,” said Gardner. “The North was the best performing English region, with prices up 5.9% year on year.”
The disparity between regions can be partly explained by affordability constraints, with house prices more expensive in most southern regions. The average property in the capital costs more than half a million.
Swipe to scroll horizontally
Region
Average house price
Annual change
Northern Ireland
£197,696
7.1%
North
£164,696
5.9%
North West
£218,012
5.5%
West Midlands
£245,173
4.7%
East Midlands
£235,877
4.4%
Yorkshire and the Humber
£207,373
4.4%
Scotland
£187,016
4.4%
South West
£306,730
2.7%
Wales
£207,187
2.7%
Outer Met
£422,372
2.4%
Outer South East
£336,224
2.3%
London
£525,535
2.0%
East Anglia
£272,152
0.5%
UK
£268,518
3.60%
Source: Nationwide. Nationwide’s regional house price indices are produced quarterly rather than monthly, which means the regional data shows the annual change in house prices in the fourth quarter of 2024.
Will house prices rise in 2025?
The outlook for 2025 could be a tale of two parts when it comes to house prices. Many buyers will look to rush transactions through in the first quarter of the year before stamp duty changes kick in.
Since late 2022, buyers have enjoyed a temporary increase to stamp duty thresholds, but these are set to revert to their original levels from 1 April.
This means buyers will need to pay tax on any amount over £125,000, rather than the current threshold of £250,000. The first-time buyer threshold will revert to £300,000 (from £425,000).
Sarah Coles, head of personal finance at Hargreaves Lansdown, says we are already seeing the effects of this on house prices. “December typically sees a pause in the property market,” she said, but price rises made an “unusual appearance” this year.
Those buying in more expensive areas could be hit the hardest once stamp duty thresholds change. The average buyer in London will go from paying £13,776 in stamp duty to £16,276 – an increase of £2,500.
First-time buyers will be hit even harder, with the tax-free threshold dropping from £425,000 to £300,000.
First-time buyer relief will also disappear entirely once the house price hits £500,000 (meaning tax will be due on any amount over £125,000). Currently, this doesn’t happen until the price hits £625,000.
This means a first-time buyer purchasing an average-priced house in London (£525,535) will go from paying £5,026 in stamp duty today, to £16,276 from 1 April.
Using the government’s stamp duty calculator can help you understand how much the changes will impact you. If you purchase a property for less than £500,000, the impact of the changes will be less dramatic.
Gardner has said the upcoming changes are likely to generate volatility that will make it more difficult to discern the underlying strength of the housing market. Despite this, he is cautiously optimistic.
He said: “Providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth.
“The latter is likely to return to the 2-4% range in 2025 once stamp duty-related volatility subsides.”
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Katie has a background in investment writing and is interested in everything to do with personal finance, politics, and investing. She enjoys translating complex topics into easy-to-understand stories to help people make the most of their money.
Katie believes investing shouldn’t be complicated, and that demystifying it can help normal people improve their lives.
Before joining the MoneyWeek team, Katie worked as an investment writer at Invesco, a global asset management firm. She joined the company as a graduate in 2019. While there, she wrote about the global economy, bond markets, alternative investments and UK equities.
Katie loves writing and studied English at the University of Cambridge. Outside of work, she enjoys going to the theatre, reading novels, travelling and trying new restaurants with friends.
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