UK house prices grow at fastest rate in two years, says Nationwide – and reveals what will happen in 2025
UK house prices have grown at their fastest rate in two years, according to Nationwide.
The building society says that the average price of a property rose by 1.2% in November.
Plus, the annual price growth rate rebounded to 3.7% last month, from 2.4% in October.
This marks the fastest rise since November 2022 when there was a 4.4% rise.
Across the UK, the average house price in November was £268,144, which is an increase from £265,738 in October.
The surprising jump means that house prices now sit just 1% below an all-time high.
Nationwide said “solid” labour market conditions, with low levels of unemployment and wage growth, had helped drive a steady rise in market activity and valuations this year.
Robert Gardner, Nationwide’s chief economist, said: “House prices increased by a robust 1.2% month-on-month, after taking account of seasonal effects, the largest monthly gain since March 2022.
“The acceleration in house price growth is surprising, since affordability remains stretched by historic standards, with house prices still high relative to average incomes and interest rates well above pre-Covid levels.”
The news comes after the Autumn Statement, in which Chancellor Rachel Reeves revealed that second-home buyers will face a stamp duty rate rise of two percentage points – from 3% to 5%.
Plus, stamp duty thresholds will also fall next spring.
From April 2025, a first-time buyer purchasing a property valued at £425,000 will incur a stamp duty charge of £6,250.
Stamp duty is one of the additional upfront costs that purchasers may incur when buying a property.
Currently, first-time buyers are exempt from paying stamp duty on properties priced up to £425,000.
If a property is more expensive, they only pay tax at 5% on the portion above £425,000 and up to £625,000.
This is believed to have accelerated demand for as homemovers look to secure a deal before the changes come in.
As a result, the building society said it expects to see a jump in the first three months of next year as buyers look to secure a home before the stamp duty hike.
Alice Haine, personal finance analyst at Bestinvest, said: “The decision not to extend the current relief on stamp duty thresholds beyond the end of March was a further blow for the market, though this is likely to lead to an uptick in house prices over the next four months as buyers race to secure a deal before the deadline to avoid a bigger tax bill.
“Prices may be more muted from April, though the prospect of further interest rate cuts may support the market if affordability levels continue to improve.”
What is stamp duty?
STAMP duty land tax (SDLT) is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.
You pay the tax when you:
- Buy a freehold property
- Buy a new or existing leasehold
- Buy a property through a shared ownership scheme
- Land is transferred to you or property in exchange for payment, for example, you take on a mortgage or buy a share in a house
The rate you pay depends on the price and type of property and certain thresholds.
If you are a first-time buyer no stamp duty is due if the property is worth £425,000 or less.
You’ll also get a discount if the purchase price is £625,000 or less and will only pay 5% SDLT on the portion from £425,001 to £625,000.
Those who aren’t first-time buyers will pay different rates depending on the value of their new home:
- If it’s up to £250,000 – no stamp duty is paid
- For the next £675,000 (the portion from £250,001 to £925,000) – stamp duty is charged at 5%
- For the next £575,000 (the portion from £925,001 to £1.5million) – stamp duty is charged at 10%
- For the remaining amount (the portion above £1.5million) – stamp duty is charged at 12%
For example, if you are buying a home worth £300,000 you would pay stamp duty at a 5% rate on the £50,000 – £2,500.
You’ll usually have to pay 5% on top of SDLT rates if buying a new residential property means you’ll own more than one.
What it means for you
The figures published today show that the housing market is proving pretty resilient.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “We might well see activity remain higher in the coming months, as buyers hurry to get in ahead of the end of the stamp duty holiday on March 31.
“However, as prices head to just 1% below their peak, and mortgage rates remain relatively high, there’s a growing chance that affordability raises its ugly head again.
“This could keep a lid on both sales and prices, as it just becomes too big a stretch to get onto the property ladder – or move up it.”
The Bank of England (BoE) cut the base rate from 5% to 4.75% in November.
But the central bank is warning that around 4.4million households could see hikes to their mortgage repayments over the next three years.
The Bank’s Financial Policy Committee (FPC) said this will include £500-per-month hikes for the mortgages of around 420,000 households.
Meanwhile, between one million and 1.5 million people are set to see a second increase in rates, having already fixed to a higher price since interest rates started rising in the second half of 2021.
Alice Haine at Bestinvest added: “For existing borrowers looking to refinance, they will be hoping the BoE pushes ahead with its next rate cut sooner rather than later.
“Locking in a new deal is vital to avoid reverting onto a lender’s Standard Variable Rate – one of the most expensive forms of mortgage borrowing – but deciding whether a fixed or variable rate is optimal can be confusing.
“This why it is best to secure the services of an independent mortgage broker to make an informed decision.”
How to get the best deal on your mortgage
IF you're looking for a traditional type of mortgage, getting the best rates depends entirely on what's available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.
Who else tracks house prices?
Halifax is part of Lloyds Group, which is the UK’s biggest mortgage lender.
Its monthly house price index is based on the mortgage data it holds and has been going since 1983.
It’s one of several key barometers of the property market.
The official measure of house prices is from the Office for National Statistics, which uses data from the Land Registry where the actual sold price is recorded.
This is the most accurate of all the indices, but the figures come out three months after the homes are sold, so there’s a big time lag.
Halifax and Nationwide each publish a monthly index tracking the average prices of homes on which they provide mortgages.
While they do adjust their figures to iron out big outliers, both lenders measure average house prices based on the properties they see.
As it’s based on mortgage approvals, this doesn’t include “cash buyers” who buy without needing a mortgage.
Rightmove and Zoopla also publish monthly house price data.
The former is based on asking prices from the property listings on its website.
Zoopla on the other hand uses sold prices, mortgage valuations and data on agreed sales.
Neither property website takes into account the price a property actually sold for like the ONS Land Registry, which could end up being higher or lower – and some might not even sell at all.
Here’s the latest data from other indices:
- ONS – average UK house prices increased by 2.8% to £293,000 in the 12 months to August 2024 – this annual growth rate is up from 1.8% in the 12 months to July 2024.
- Halifax – the average UK house price hit a new high in October, putting it just shy of £294,000, increasing by 0.2%.
- Rightmove – the typical asking price for a home coming onto the market was £366,592, down by 1.4% or £5,366 month-on-month.
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