After falling in 2023, house prices have had a decent recovery in 2024 with buyer confidence boosted by interest rate cuts.
Data from HM Land Registry, the most authoritative house price index, shows prices increased by 3.4% on an annual basis in October. This brings the average UK house price to £292,000.
October’s report is the most recent data currently available, published on 18 December. As each report is released with a two-month time lag, we won’t have the full-year figures for 2024 until February.
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There is generally a seasonal lull towards the end of the year, with few people opting to move in the lead-up to Christmas. However, based on the current trajectory (and data from a range of providers), UK house prices should end the year in positive territory.
Homeowners also enjoyed a milestone moment earlier this year, with prices finally returning to 2022 levels – their previous peak – over the summer. August set a new record with the average house price reaching almost £293,000.
Despite this, the new year could bring headwinds.
Most experts have scaled back the number of interest rate cuts they expect in 2025, partly as a result of the Autumn Budget and new inflationary pressures. Fewer cuts in 2025 could mean mortgage rates fall more slowly than previously hoped.
Many buyers will also find themselves paying more stamp duty from April 2025, when temporary relief measures come to an end. This could act as a deterrent to moving, particularly when affordability is already stretched.
We look at the latest developments in sale and asking prices, before delving into the outlook for house prices in 2025.
What's happening with sold house prices?
Sold house prices are the most accurate indication of what is happening in the UK property market – and HM Land Registry is the most authoritative source. The only drawback is that the transactions this index measures may have been agreed several months ago. As a result, it is not always a good indication of current market conditions.
Major lenders like Halifax and Nationwide also publish trusted house price data, but this is based on the lender’s valuation at the mortgage approval stage. This can differ from the actual sale price, but the idea is that it is near enough to the end of the home-selling process to offer a more realistic snapshot than initial asking prices.
Property website Zoopla also publishes a house price index, which uses sold prices, mortgage valuations and data for agreed sales. We look at which house price index is best in further detail in a separate article.
What do the latest reports show?
- HM Land Registry: House prices increased 3.4% on an annual basis in October. November’s report is not yet available.
- Halifax: House prices increased 4.8% on an annual basis in November.
- Nationwide: House prices increased 3.7% on an annual basis in November.
- Zoopla: House prices increased 1.5% on an annual basis in November.
Of course, there are big regional variations but using the "house prices in your area" report from the Office for National Statistics can help you understand how prices have changed in your borough or local authority area.
Broadly speaking, the latest report from HM Land Registry suggests prices are growing at the fastest rate in Northern Ireland (6.2%), followed by Scotland (5.5%). Of the English regions, the North East is seeing the highest growth (4.7%).
London was the region with the lowest annual growth rate in October (0.2%). Prices in the capital are particularly high, with the average house now costing almost £520,000. This low growth rate suggests affordability limits have become stretched.
Are property asking prices going up?
Asking prices are a useful barometer for market sentiment as it currently stands. These snapshots tend to be published only a few weeks after the data was recorded. The drawback is that asking prices don’t necessarily reflect the final sold price.
Rightmove’s house price index, based on asking prices, suggests house prices increased by 1.4% on an annual basis in December.
“We’re continuing to see strong activity in the market as we close out the year, which reflects the growing confidence buyers are feeling about making their moves happen,” said Tim Bannister, property expert at Rightmove.
“Sales agreed are up 22%, while the number of buyers enquiring about homes for sale with estate agents is up 13% compared to the same period last year,” he added.
Will house prices rise in 2025?
Further interest rate cuts are expected in 2025. While this sounds like good news for the housing market, the outlook has been complicated by recent political and economic developments.
Inflation has crept up in recent months and could rise further in 2025, partly influenced by policies announced in the Autumn Budget. If inflation stays higher for longer, interest rates probably will too.
Some experts now think the Bank of England will only cut rates three or four times in 2025 – less than previously expected. This will probably mean mortgage rates fall more slowly than previously expected too.
In light of recent developments in the mortgage market, real estate consultancy Knight Frank has downgraded its forecasts for house price growth, but still expects prices to rise by 2.5% in 2025, 2% in 2026 and 3.5% in 2027. This is down from estimates of 3%, 4% and 5% previously.
Tax changes could also dampen buyer demand, with stamp duty thresholds reverting 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).
We could see a surge in activity in the first three months of the year as buyers race to beat the deadline, with demand falling shortly after. Robert Gardner, chief economist at Nationwide, predicts a “period of weakness in the following three to six months, as occurred in the wake of previous stamp duty changes”.
Meanwhile, estate agent Savills has predicted that top-end properties will suffer the most, with investors being hit by extra stamp duty charges (such as the 5% surcharge on second homes) and changes to non-dom rules. It expects prime central London houses to fall in value by 4% in 2025.
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