House prices in the UK increased by 4.7% in the year to December 2024, with the average house price standing at £269,426, Nationwide has revealed.

The building society’s latest house price index showed that house prices increased by 0.7% month-on-month, which is a slight drop of 1.2% growth in November.

Chief economist at Nationwide, Robert Gardner, stated that mortgage market activity and house prices "proved surprisingly resilient" in 2024, given the "ongoing affordability challenges" for potential buyers.

He added: "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."

In the fourth quarter of 2024, Northern Ireland continued to be the best performing region, with house prices increasing by 7.1% annually to £197,696.

House prices in Scotland (£187,106) and Wales (£207,187) also saw increases, jumping annually by 4.4% and 2.7%, respectively, in Q4.

The North and the North West were the best performing regions in England, with house prices increasing by 5.9% and 5.5% respectively in Q4 to £164,696 and £218,012.

London saw its average house price increase by 2% in the fourth quarter to £525,535, remaining the most expensive region in the UK.

Looking ahead, Gardner said that Q1 2025 could see an increase in the number of transactions which in turn could lead to a drop in the number of transactions later in the year.

Gardner said: "Upcoming changes to stamp duty are likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax. This will lead to a jump in transactions in the first three months of 2025, especially in March, and a corresponding period of weakness in the following three to six months, as occurred in the wake of previous stamp duty changes. 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."

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