UK house prices fall first time since March

• Published On: 07 January 2025 at 20:47

British house prices unexpectedly fell by 0.2% in December, following a 1.2% increase in November, according to Halifax data released Tuesday.

Despite this decline, house prices ended 2024 higher than in December 2023, with a 3.3% annual increase—below the 4.2% rise expected by economists, according to Reuters.

Amanda Bryden, Halifax Head of Mortgages, stated that mortgage affordability will remain a challenge, particularly as bank rates are expected to fall more gradually than previously anticipated.

She also mentioned that the housing market has recently been boosted by lower mortgage rates, increased income, and upcoming Stamp Duty policy changes.

"However, providing employment conditions don't deteriorate markedly from a more recent softening, buyer demand should hold up relatively well and, taking all this into account, we're continuing to anticipate modest house price growth this year," according to Bryden.

Last week, the Nationwide Building Society predicted that house price inflation would return to the 2-4% range by 2025, once stamp duty-related volatility subsided.

Ashley Webb, an economist at Capital Economics, predicted that mortgage rates will fall more than expected, reaching 4.0% by 2026, while house prices will rise by 3.5% in Q4 2024 and 4.5% in Q4 2026.

The Bank of England reduced its benchmark interest rate by 50 basis points in 2024, first in August and then again in November.