UK home costs rise greater than anticipated in December

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UK home costs rose greater than anticipated in December, supported by consumers dashing to finish offers forward of a stamp responsibility enhance in April, in accordance with lender Nationwide.

Costs rose 0.7 per cent from November, above the 0.1 per cent rise economists had anticipated, taking the common home value to £269,426, just under the report excessive reached in 2022.

Nationwide mentioned home costs have been 4.7 % greater in December than a yr earlier, the quickest annual tempo since October 2022 and beating economists’ expectations of a 3.8 % enhance. %.

“Mortgage market exercise and home costs have confirmed surprisingly resilient in 2024 given the continued affordability points going through potential consumers,” Robert Gardner, Nationwide’s chief economist, mentioned Thursday.

Nicky Stevenson, managing director of property agent group Advantageous & Nation, mentioned home costs “proceed to defy expectations, with home costs persevering with to rise regardless of the standard seasonal slowdown”.

“This displays sturdy demand as consumers moved rapidly to safe offers forward of the April 2025 stamp responsibility threshold adjustments,” he added.

Chancellor Rachel Reeves confirmed within the Finances that the momentary stamp responsibility vacation would finish in March, prompting many analysts to anticipate a rush of offers forward of time. From April, first-time consumers, for instance, will begin paying the tax on properties price £300,000 or extra, as a substitute of the present £425,000.

Mortgage charges rose in November after the funds, reflecting expectations that the Financial institution of England would minimize borrowing prices extra slowly than anticipated.

Nonetheless, borrowing prices stay nicely under their peak final summer season. The common two-year fastened price with a loan-to-value ratio of 60 per cent was 4.39 per cent in November, in accordance with Financial institution of England knowledge. This determine is up from 4.21 % in October, however nicely under the 6.22 % reached in July 2023.

“The nationwide home value index means that the revival of pent-up demand, launched after the funds, was anticipated to final just a little longer,” mentioned Alex Kerr, economist at Capital Economics. “Strikingly, the rise in demand seems to have offset the current rise in mortgage charges. »

Home costs rose in all areas within the ultimate quarter of 2024, with Northern Eire recording the quickest annual price of seven.1%, in accordance with Nationwide.

Nonetheless, the lender reported that throughout England there was “a transparent north-south divide” in home value developments in 2024, with a rise of 4.9% within the north however by solely 2.2% within the south.

Gardner expects UK home costs to rise between 2 and 4 % in 2025.

It additionally forecasts that property market exercise will step by step strengthen “as affordability constraints ease via a mixture of barely decrease rates of interest and better earnings than home value development.” .