The Nationwide House Price Index has just been released.  It can be seen here, and in summary says:

House Price Trends

• Annual growth: UK house prices rose 4.1% year-on-year in January 2025, down from 4.7% in December 2024.
• Monthly growth: Prices increased just 0.1%, compared to 0.7% in December.
• Affordability concerns:
  • A typical first-time buyer with a 20% deposit now spends 36% of take-home pay on mortgage payments (above the long-run average of 30%).
  • The house price-to-earnings ratio remains at 5.0, significantly higher than the long-term average of 3.9.
  • Rising rents and the cost-of-living crisis continue to hamper saving for deposits.

Market Influences & Buyer Behaviour

• Stamp Duty changes in April: A rush to complete purchases before tax rises has fuelled demand.
• Interest rate speculation: A potential Bank of England rate cut in February could further support market activity.
• Supply & demand dynamics:
  • Buyer demand is up 13% year-on-year (Zoopla).
  • Housing supply increased by 10%, which could help curb excessive price growth.

Market Outlook

• Optimistic view:
  • Strengthening buyer confidence and improving economic stability may sustain growth.
  • Estate agents see current conditions as an opportunity for sellers.
• Cautionary view:
  • The market risks becoming too expensive for first-time buyers.
  • Once Stamp Duty incentives fade, demand could weaken later in 2025.

Sales Activity

• December 2024 saw a 19% rise in sales (seasonally adjusted), reaching 96,330 transactions.
• Sales were 3% higher than November but 7% lower than the previous year.
• Activity was particularly strong in London and the South East, where higher tax rates incentivised early completions.

Conclusion

The UK property market begins 2025 with modest price growth and steady sales, driven by Stamp Duty changes and economic stability. However, affordability pressures remain a challenge, particularly for first-time buyers. The coming months will reveal whether price growth can be sustained or if economic headwinds, including inflation and affordability constraints, will slow the market later in the year.