"UK House Prices Surge as Buyers Race Against Stamp Duty Deadline"

Summary:

UK house prices rose unexpectedly in December 2024 as buyers rushed to complete purchases before the stamp duty changes in April 2025. Nationwide reported a 0.7% monthly increase, which exceeded economists’ prediction of 0.1%. Annual growth reached 4.7%, the fastest pace since October 2022. The average house price climbed to £269,426, close to the record highs of 2022.

The rise was driven by strong demand from buyers looking to avoid new stamp duty thresholds that will increase taxes on properties over £300,000 for first-time buyers. Mortgage rates edged up in November to 4.39% for two-year fixed rates but remained well below the 6.22% peak of mid-2023.

All regions experienced price increases, with Northern Ireland showing the highest annual growth of 7.1%. A clear divide in England saw the north with higher price growth of 4.9% compared to only 2.2% in the south. Nationwide expects house prices to increase by 2% to 4% in 2025 as interest rates decrease slightly and wages grow faster than house prices.

My Opinion:

The resilience of the UK housing market in the face of affordability challenges is impressive but may not last. The rush to finalise purchases before the stamp duty changes created a temporary surge in demand that is unlikely to continue.

While the numbers suggest a healthy market, they hide deeper issues like the growing difficulty for first-time buyers to enter the market. Once the stamp duty changes come into effect, demand could drop significantly unless wages continue to rise faster than house prices.

The divide between the north and south of England shows long-standing regional economic disparities that tax incentives cannot solve. The government should focus on creating more housing and addressing these inequalities rather than relying on temporary measures to boost the market.

Without structural changes, the housing market could remain vulnerable to economic shifts, leaving many potential buyers priced out. A long-term strategy is essential to ensure the housing market is stable and accessible for everyone.