UK house prices dip for first time since March, says Halifax; Next warns of slowing sales growth in 2025 – business live

Halifax says house prices dipped by 0.2% in December while annual price growth slowed to 3.3%.

Here’s some instant reaction to the Halifax house price data.

Tom Bill, head of UK residential research at Knight Frank, said:.

The current rate of house price growth will come under more pressure as higher borrowing costs triggered by the budget start to bite. A number of buyers are still sitting on sub-4% mortgage offers made before October, which has supported demand in recent months.

Activity has also been temporarily boosted ahead of April’s stamp duty increase but a recent dip in mortgage approvals is a sign that cracks from the Budget are starting to show. We recently revised down our UK house price forecast for 2025 to 2.5% to reflect the tougher lending landscape and the fact economic growth is struggling to gain momentum.

The fall in December ended a run of five consecutive monthly increases, but with wages expected to rise and mortgage rates to reduce in 2025 we expect house prices to rise in 2025.

The Stamp Duty stampede is likely to underpin prices in the first three months of the year, before the house price baton will be passed onto mortgage rates. There remains uncertainty around the broader macroeconomic outlook, but demand for homes continues to outstrip supply and our love affair with homeownership has not been dented by rising costs of living, higher for longer mortgage rates or the budget.

The housing market was broadly steady at the start of 2024, with house price growth taking off from the summer onwards. In the latter half of the year, house prices grew in response to the falls in mortgage rates, alongside income growth, both leading to financial pressures somewhat easing for buyers. Impending changes to Stamp Duty thresholds have also given prospective first-time buyers even greater motivation to get on the housing ladder and bring any home-buying plans forward. Together, these elements meant mortgage demand picked up, hitting the highest level in over two years and back to levels seen pre-pandemic.

In many areas across the country, house prices were also buoyed by demand outstripping supply, possibly further amplified by homeowners holding off putting their property on the market – perhaps in anticipation of mortgage rates reducing further.

While the housing market has been supported in recent months by falling mortgage rates, income growth and the announcement on upcoming Stamp Duty policy changes, mortgage affordability will remain a challenge for many, especially as the Bank Rate is likely to come down more slowly than previously predicted. However, providing employment conditions don’t deteriorate markedly from a more recent softening, buyer demand should hold up relatively well and, taking all this into account, we’re continuing to anticipate modest house price growth this year.