House prices in January 2025 were 3.0% higher than the same month a year earlier.
The latest Halifax House Price Index shows that house prices started 2025 on a high, with the average property price reaching a record £299,138. But while monthly prices increased, annual growth has slowed slightly. So, what does this mean for you as a homeowner or buyer? Let’s break it down.
House Prices at a Record High
- Monthly increase: +0.7% (after a -0.2% drop in December 2024)
- Annual increase: +3.0% (down from 3.4% in December)
- Average house price: £299,138
House prices have now more than recovered from the slight dip in December, but annual growth has eased to its slowest pace since July 2024.
Regional House Price Changes
House prices varied across different areas, with some regions seeing stronger growth than others:
- Northern Ireland had the highest annual price growth at +5.9%, although this was lower than December’s +7.3%. Average price: £205,473.
- Wales saw an annual price rise of +3.6%, with homes averaging £227,397.
- Scotland recorded a smaller annual increase of +2.4%, with average prices at £210,690.
- England’s North East saw the strongest growth at +5.2%, overtaking the North West for the first time since 2023. Average price: £178,696.
- London remains the most expensive region, with an average house price of £548,288, up +2.8%.
What’s Driving the Market?
There are several factors influencing the housing market at the start of 2025:
1. Mortgage Rates and Affordability
- Mortgage rates are expected to stay between 4% and 5% throughout the year.
- Buyers are adjusting to this “new normal,” realising that the ultra-low interest rates of previous years are unlikely to return.
- Wages are growing faster than inflation, slightly improving affordability.
2. Increased Demand for Mortgages
- Mortgage approvals rose by 0.7% in December, according to the Bank of England.
- Demand may be partly driven by first-time buyers rushing to complete purchases before the March stamp duty increase.
- House sales increased in December by +2.9% from the previous month.
3. Market Confidence and Supply Issues
- Buyer confidence remains relatively stable despite wider economic uncertainties.
- The biggest issue in the housing market is the ongoing lack of supply, which is expected to keep prices growing at a steady rate.
What This Means for You
Whether you’re looking to buy, sell, or remortgage, these trends could impact your decisions.
If You’re a Buyer
- House prices are rising but at a slower pace, meaning there may still be good opportunities.
- Mortgage rates are more stable than last year, giving you more certainty when planning your purchase.
- If you’re a first-time buyer, consider acting before March to avoid potential increases in stamp duty.
If You’re a Seller
- House prices have reached record highs, which is good news if you’re thinking of selling.
- Demand remains strong, particularly in certain regions, so you may get a competitive offer.
- If you’re in a high-growth area like Northern Ireland or the North East, your property could be particularly attractive to buyers.
If You’re Looking to Remortgage
- Rates are more predictable than last year, meaning you can plan your remortgage with more confidence.
- If your current deal is expiring, speak to a mortgage adviser to find the best option available to you.
Need Advice? We’re Here to Help
The property market is always changing, and navigating mortgage options can be complex. Whether you’re buying your first home, moving, or remortgaging, Kerr & Watson can help you find the right mortgage for your situation.
Get in touch with us today to discuss your mortgage options and get expert advice tailored to your needs.
Read the full report for more insights on the current state of the UK housing market: Halifax Price Index January 2025
Source: Halifax
