A key survey revealed that house prices declined for the first time in nine months as many prospective buyers grappled with mortgage affordability amid rising interest rates.
Property values dropped by 0.2% in December, leading to an overall 3.3% increase in the typical home’s value throughout 2024, according to the Halifax house price index.
By the end of the year, the average home was valued at £297,166, slightly lower than the record high reached in November.
This downturn coincides with traders scaling back their expectations for the Bank of England to cut interest rates this year amid indications that inflation remains persistent in the UK.
Money markets now forecast only two quarter-point rate reductions this year, bringing the Bank Rate to 4.25%, pushing mortgage rates higher.
Amanda Bryden of Halifax commented, “The housing market was relatively stable at the start of 2024, with house price growth accelerating from the summer onwards.
“In the latter half of the year, house prices increased in response to falling mortgage rates and rising incomes, both of which helped to somewhat ease financial pressures for buyers.”
She noted that the housing market has been supported in recent months by decreasing mortgage rates, income growth, and the announcement of upcoming Stamp Duty policy changes.
However, Bryden warned that mortgage affordability “will remain a challenge for many, especially as the Bank Rate is likely to decrease more slowly than previously predicted.”
