Northern Ireland saw seen the strongest house price growth of UK regions for the second year in a row during 2024, a report from Nationwide Building Society has said.
Nationwide said average prices here had risen by 7.1% over the year to hit £197,696.
UK wide, Nationwide said house prices ended the year on a strong footing, sitting just below an all-time high.
But it said stamp duty changes this spring could generate volatility, triggering a jump in house sales in early 2025, followed by a weaker period.
Average prices in the UK increased by 4.7% annually in December, accelerating from 3.7% in November, the society said.
Property values increased by 0.7% month-on-month in December, taking the average house price to £269,426.
Robert Gardner, Nationwide’s chief economist, said: “UK house prices ended 2024 on a strong footing, up 4.7% compared with December 2023, though prices were still just below the all-time high recorded in summer 2022.”
The all-time high, recorded in August 2022, was £273,751.
Mr Gardner continued: “Mortgage market activity and house prices proved surprisingly resilient in 2024 given the ongoing affordability challenges facing potential buyers.
“At the start of the year, house prices remained high relative to average earnings, which meant that the deposit hurdle remained high for prospective first-time buyers.
“This is a challenge that had been made worse by record rates of rental growth in recent years, which has hampered the ability of many in the private rented sector to save.
“Moreover, for many of those with sufficient savings for a deposit, meeting monthly payments was a stretch because borrowing costs remained well above those prevailing in the aftermath of the pandemic.
“For example, a typical mortgage rate for someone with a 25% deposit hovered around 4.5% for much of the year, three times the 1.5% prevailing in late 2021, before the Bank of England started to raise the bank rate.
“As a result, it was encouraging that activity levels in the housing market increased over the course of 2024 with the number of mortgages approved for house purchase each month rising above pre-pandemic levels towards the end of the year.”
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Looking ahead, Mr Gardner said stamp duty changes from April “are likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax”.
A temporary “nil rate” threshold for first-time buyers will shrink back to £300,000, from £425,000 currently. Stamp duty applies in England and Northern Ireland.
Mr Gardner predicted the changes will lead to a jump in transactions in the first three months of 2025, particularly in March, and a period of weakness in the following three to six months.
He added: “This will make it more difficult to discern the underlying strength of the market.
“But, providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth.
“The latter is likely to return to the 2-4% range in 2025 once stamp duty-related volatility subsides.”
Mr Gardner said that within England, there was a “clear north-south divide” in house price performance in 2024 as the North East, North West, Yorkshire and Humber and the Midlands combined continued to outperform southern England, with prices up by 4.9% year-on-year.
Southern England (including the South West, Outer South East, Outer Metropolitan, London and East Anglia regions) recorded a 2.2% year-on-year house price rise.
Mr Gardner added: “Northern Ireland was the best-performing area for the second year running, with prices up 7.1% over the year.
“Scotland recorded a 4.4% increase in 2024, whilst Wales saw a 2.7% year-on-year rise.”
Looking at different types of property, Mr Gardner said: “Terraced houses have seen the biggest percentage rise in prices over the last year, with average prices up 4.4% in 2024.
“Flats saw a recovery in price growth, recording their best year since 2021, with a 4.0% rise. Semi-detached properties recorded a 3.4% annual increase, while detached properties saw a 3.2% year-on-year rise.
“However, if we look over the longer term, detached homes have continued to have a slight edge over other property types, most likely due to the ‘race for space’ seen during the pandemic. Indeed, since (the first quarter of) 2020, the price of an average detached property increased by nearly 27%, while flats have only risen by (around) 15% over the same period.”
Sarah Coles, head of personal finance, Hargreaves Lansdown said: “Like a salad or a spin class, property price rises made an unusual appearance in December, as the looming end of the stamp duty holiday persuaded people to leave the sofa for a spot of house hunting.”
She continued: “At a time when affordability is under so much pressure, your deposit will make a key difference, so it pays to consider whether there’s any way you can boost it.”
Here are average house prices followed by annual house price increases in the fourth quarter of December, according to Nationwide Building Society:
Northern Ireland, £197,696, 7.1%
North East, £164,696, 5.9%
North West, £218,012, 5.5%
West Midlands, £245,173, 4.7%
East Midlands, £235,877, 4.4%
Yorkshire and Humber, £207,373, 4.4%
Scotland, £187,016, 4.4%
South West, £306,730, 2.7%
Wales, £207,187, 2.7%
Outer Metropolitan (includes St Albans, Stevenage, Watford, Luton, Maidstone, Reading, Rochford, Rushmoor, Sevenoaks, Slough, Southend-on-Sea, Elmbridge, Epsom and Ewell, Guildford, Mole Valley, Reigate & Banstead, Runnymede, Spelthorne, Waverley, Woking, Tunbridge Wells, Windsor and Maidenhead, Wokingham), £422,372, 2.4%
Outer South East (includes Ashford, Basingstoke and Deane, Bedford, Braintree, Brighton and Hove, Canterbury, Colchester, Dover, Hastings, Lewes, Fareham, Isle of Wight, Maldon, Milton Keynes, New Forest, Oxford, Portsmouth, Southampton, Swale, Tendring, Thanet, Uttlesford, Winchester, Worthing), £336,224, 2.3%
London, £525,535, 2.0%
East Anglia, £272,152, 0.5%