The housing market started 2024 on a positive note – inflation, mortgage costs (and the base rate) were finally coming down, the cost of living crisis was abating, incomes were growing and buyer confidence was on the rise. And, with the advent of spring, the process accelerated, although affordability constraints ensured the market remained price sensitive.

Most of 2024, though, was characterised by speculation about how far and fast the base rate would fall. As summer approached and those reductions turned out to be slower than expected and an election loomed, the market moved into a state of hiatus as buyers waited for further falls.

With Labour’s resounding victory, some certainty returned and when that was added to a July reduction in the base rate, confidence began rebuilding. It was only short-lived, as concerns quickly grew over what might be in Rachel Reeve’s first budget in the autumn and Keir Starmer’s warning of ‘pain to come’ and, once more, buyers went back to sitting on their hands.

Even a second reduction in the base rate only produced a muted response. Then, in October, we finally got to know what Labour had in store for us and the news was mixed for the Property world. The biggest changes were to Stamp Duty, with the additional premiums for BTL and second-home buyers rising to 5% and it was also announced that rates for first-time buyers would go up on April 1st 2025. To the relief of landlords, Capital Gains Tax on properties was left more-or-less untouched and Labour’s ambitious 1.5 million housebuilding programme was broadly welcomed.

As the market digested all the changes, activity slowly picked up and there was a spike in first-time buyer activity, as they rushed to complete purchases before the spring Stamp Duty deadline.

The financial markets, though, were not quite so forgiving and, yet again, there was speculation that the Government’s big budget commitments would put up the cost of borrowing and slow the rate at which the base rate would come down. The housing market, however, shrugged off the news, prices rose and all the main indices finished the year in positive territory.

According to Halifax’s figures, which are fairly typical, house prices were up by 3.3% in 2024. The North West had the strongest growth – up +5.3% compared to the previous year, with the average property now costing £238,832. London had the highest average house price in the UK, at £547,614, which was 3.3% up on last year.

So, what is everyone expecting the housing market to do now? Unlike last year, almost everyone is predicting house prices will rise in 2025.

However, there are some headwinds to negotiate, with what happens in the housing market depending on the strength of the economy, the labour market and the future direction of the base rate, all of which have been impacted by the Autumn Budget.

2024: the facts

Nationwide: Dec 23 to Dec 24: National £269,426 +4.7%. London £525,535 +2.0%
Halifax: Dec 23 to Dec 24: National £297,166 +3.3%
Land registry: Oct 23 to Oct 24: National £292,059 +3.4%. London £519,579 +0.2%
Zoopla: Nov 23 to Nov 24: National £267,500 +1.9%. London £535,000 +1.4%
Rightmove: Dec 23 to Dec 24: National £360,197 +1.4%. London £661,444 -0.8% (asking prices)

The predictions

Please note – where possible, comparative figures for 2024 are from the company’s own indices.

Nationwide
Last year, Nationwide said there was likely to be a modest decline of around 0% to -2%, instead, there was a 2.0% rise. In 2024, they are expecting prices to increase somewhere in the range of 2% to 4%.

Halifax
Halifax’s 2024 prediction of price falls of between 1% and 2% was a long way off their final figure of a 3.3% rise. This year, they expect prices to rise by 3%.

Zoopla
In 2024, Zoopla predicted prices would dip by 2%. In the event, the portal says house price growth should hit 2.5% (figures don’t yet include December). In 2025 they expect growth of 2.5%.

Rightmove
Rightmove predicted a 1% fall in 2024 against a 1.4% rise. This year, they have gone for a more bullish +4%.

Some other predictions

CBRE forecasted house prices would fall 0.9% by the end of 2024. This year, with the outlook improving, they are expecting a 3.5% rise.

Capital Economics was predicting prices to dip by 1.5% but is far more optimistic about 2025, forecasting some of the highest growth at 5%.

Rental market

Most were expecting rent rises to modify in 2024, dropping from 9% the previous year to around 5%. In the event, Homelet’s Rental Index was considerably lower at +1.3% and, in Greater London, rents fell by 2.6%.

Many commentators had been suggesting for some time that rents would eventually hit the limits of affordability and, it seems, that may finally be happening. However, there are now concerns over renewed upward pressure on rents, with fears the looming Renters’ Rights Bill will lead to a landlord exodus and severe supply shortages.

So far, fortunately, there is no evidence this is happening in significant numbers, although the legislation is still making its way through parliament.

Rightmove’s Tim Bannister, says: “There are two competing factors influencing rental price changes right now. The ongoing imbalance between supply and demand is putting upward pressure on prices. On the other hand, rent rises outpacing wage growth over the past five years has stretched affordability to extreme levels, and is showing in the increasing number of price reductions.”