The House of Commons library has released a report of Housing market: Economic indicators.   It can be seen here, and in summary:

The UK housing market has seen notable shifts over the past year, with house prices, mortgage approvals, and construction activity each telling a unique story of change and resilience. As we step into 2025, let’s take a closer look at the key economic indicators shaping the housing sector.

House Prices on the Rise

According to the latest UK House Price Index, house prices increased by 4.6% between December 2023 and December 2024. On a seasonally adjusted basis, the average price of a home rose by 0.3% between November and December 2024. While overall growth remained steady, regional variations painted a more complex picture.

Northern Ireland, Scotland, and the North East saw the fastest house price growth, while London remained flat. Wales and the South West experienced the slowest rate of increase, highlighting the uneven nature of the housing market recovery across the UK.

Mortgage Approvals Climbing

One of the strongest indicators of market confidence is mortgage approvals. The number of mortgages approved for house purchases in December 2024 was up 28% compared to the same time in 2023. There were 66,526 mortgage approvals in December 2024, a significant jump from 52,087 the previous year.

This uptick suggests a growing appetite for homeownership, driven by stabilising interest rates and increased market activity. However, approvals remain lower than the post-pandemic peak seen in late 2020.

Housing Starts and Completions: A Mixed Picture

The construction sector has faced challenges in maintaining a steady supply of new homes. In Q3 2024, house building completions in England fell by 13% compared with Q2 and were down 12% from Q3 2023. This slowdown reflects ongoing labour shortages, supply chain issues, and economic uncertainties.

However, house building starts rebounded, rising 17% from Q2 2024 and a significant 38% from Q3 2023. The sharp fluctuations in building activity can be attributed in part to regulatory changes, particularly new energy performance and electric vehicle charging standards introduced in mid-2023.

Looking Ahead

With the government pushing for improved energy efficiency in homes and ongoing reforms in the leasehold sector, the housing market is set for further transformation in 2025. Mortgage approval rates and construction activity will be key factors in determining whether house prices continue to rise or stabilise.

For prospective buyers and investors, the market presents both opportunities and challenges. While rising mortgage approvals signal confidence, the uneven regional growth and shifting regulatory landscape mean careful planning is essential.

As we move forward, all eyes will be on the Bank of England’s interest rate policies and government initiatives aimed at increasing housing supply. One thing is certain: the UK housing market remains a dynamic and evolving space, shaping the way people buy, sell, and invest in property.