House prices dip by 0.2% in December amid warnings to homeowners of ‘costly’ tax change (Image: Getty)
dropped by 0.2% in December compared to the previous month, breaking a streak of five consecutive monthly increases, according to Halifax.
Despite the slight decline, annual prices rose by 3.3%,
Based on these figures, a homeowner of an average UK property (worth £297,166) would lose £594 from their home’s value.
Northern Ireland maintained the strongest property price growth of any nation or region in the UK, rising by 7.4% on an annual basis in December. Properties in Northern Ireland now cost an average of £205,895.
House prices in Wales were up by 4.6% compared to the previous year, with properties now costing an average of £226,646.
Scotland saw a lower rise in house prices compared to the rest of the UK, with properties in the country now £209,959, 2.4% more than the year before.
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Home buyers are set to face thousands of pounds worth of cost increases in the coming months. (Image: Getty)
In England, house prices in the North West were up 5.3% compared to the previous year, with properties now costing an average £238,832 – the strongest growth of any English region.
London retains the highest average house price in the UK, at £547,614, up by 3.3% compared to last year.
However, analysts warn the housing market faces fresh challenges in 2025 as upcoming stamp duty changes are set to make buying a home much more “costly”.
From April, the Stamp Duty threshold for home movers will halve from £250,000 to £125,000, and first-time buyers could face paying up to £6,250 in stamp duty due to a reduction in their relief thresholds.
Amanda Bryden, head of mortgages, Halifax, commented: “The housing market was broadly steady at the start of 2024, with house price growth taking off from the summer onwards. In the latter half of the year, house prices grew in response to the falls in rates, alongside income growth, both leading to financial pressures somewhat easing for buyers.”
Ms Bryden cautioned that despite recent support from falling rates and rising incomes, affordability challenges persist.
She noted that affordability will “remain a challenge for many,” particularly with upcoming Stamp Duty changes and the Bank Rate expected to decrease more slowly than previously anticipated.
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Karen Noye, expert at Quilter, said: “The changes to Stamp Duty, which are due to come into effect in April, could weigh heavily. For home movers, the current stamp duty threshold of £250,000 will halve to its previous level of £125,000, meaning the process will become even more costly.
“For first time buyers, the impact will be keenly felt. Not only will the Stamp Duty threshold decrease from £425,000 to £300,000, which could mean they go from paying nothing to paying up to £6,250 in Stamp Duty, but the maximum purchase price first time buyers’ relief can be claimed on will fall to £500,000 from the current level of £625,000.
“This will no doubt make taking the first step onto the property ladder even more challenging, particularly for those living in areas of the country with higher average house prices.”
Ms Noye noted that first-time buyers are a “critical element” of the housing market, but piling on additional affordability pressures at a time when purchasing a first home is already extremely difficult means we could see a reduction in such purchases.
She added: “This would not only be disappointing news for those who had hoped to take that first step, but it would also likely ripple across the market and we could see a ‘gluing up’ effect if chains stall and transactions slow as a result.”
Iain McKenzie, CEO of the Guild of Property Professionals, suggested demand could temper after the Stamp Duty changes, however, he added that expected Base Rate cuts should play a part in “increasing sentiment in the market, bringing down rates and enticing more activity.”
Here are average house prices followed by the annual increases, according to Halifax. The regional annual change figures are based on the most recent three months of approved transaction data.
- East Midlands, £244,274, 3.7%
- Eastern England, £336,426, 3.1%
- London, £547,614, 3.3%
- North East, £176,454, 4.6%
- North West, £238,832, 5.3%
- Northern Ireland, £205,895, 7.4%
- Scotland, £209,959, 2.4%
- South East, £389,431, 3.1%
- South West, £305,326, 3.8%
- Wales, £226,646, 4.6%
- West Midlands, £259,365, 4.5%
- Yorkshire and the Humber, £213,226, 4.0%