The UK housing market beat expectations in 2024, with recovery supported by lower mortgage rates and strong wage growth, according to Halifax.
Halifax’s latest housing market review and outlook found that property prices hit a record high of £298,083 following annual growth of +4.8%, with transaction volumes returning to pre-pandemic levels.
The lender says affordability has improved but it continues to be a challenge for many buyers, with a decline in interest rates widely expected to be slower, impacting those who are yet to refinance older, existing deals.
Looking to next year, Halifax expects modest house price growth in the range of 0% to +3%, along with a further small increase in the number of transactions.
As with recent years, the lender says that forecast uncertainty remains high given the current economic environment.
Halifax head of mortgages Amanda Bryden says: “Two key factors have driven the recovery in the housing market over the last 12 months. The first is lower mortgage rates, at times up to 160 basis points below the peaks of 2022 and 2023.”
“Second is that income growth continues to catch up with the consumer price increases of the past few years. For new mortgages, monthly costs as a percentage of earnings fell from 33% to 29% over the last year.”
“This easing financial pressure has boosted buyer confidence as demand for mortgages reached its highest level in more than two years, with volumes now back in line with pre-pandemic levels, having trailed by around 20% at the start of the year.
“The uneven availability of properties for sale across the country, relative to demand, also continues to underpin prices. Higher mortgage rates compared to a few years ago may have made some homeowners hesitant to sell, to avoid triggering an immediate increase in their monthly mortgage cost when they move. Additionally, new build completions were at their lowest level since 2018, excluding the pandemic lockdown periods.
Also commenting on Halifax’s report is Propertymark NAEA president Toby Leek, who states: “Mortgage lenders have introduced more competitive mortgage products to the market compared to those seen last year, however with the slight dampening news of a rise in inflation, it is likely that mortgage offers will only continue improving once inflation tracks downward so that interest rates can be cut.”
“With wages on a slight upward trajectory and affordability pressures easing for many, buyers and sellers will gain the extra confidence and financial boost needed to make their next home move a reality.”
“Alongside this, home movers across England and Northern Ireland will be pushing their next home move in order to beat the commencement of rises in Stamp Duty from April 2025 so a flurry of market and mortgage activity is to be expected in the coming months.”