The UK housing market has beaten expectations in 2024, with the market recovering as a result of lower mortgage rates and strong wage growth, according to Halifax.

The bank’s housing market review for 2024 revealed that property prices hit a record high of £298,083, with annual growth of 4.8% in the year to November. This is the strongest level of growth since November 2022.

Throughout the year, property prices fell on a monthly basis just once, dropping by 0.9% in March.

Halifax stated that this was a result of transaction volumes returning to pre-pandemic levels.

Furthermore, it added that affordability has "improved but continues to be a challenge for many buyers", with a decline in interest rates expected to be slower. This is set to impact those who are yet to refinance older, existing deals.

Head of Halifax Mortgages, Amanda Bryden, said: "[This year] was a year when UK property prices once again defied expectations, rising by 4.8% on an annual basis, to now sit at a record high of £298,083. The market remained largely flat until the summer, with most of that growth concentrated in the second half of the year.

"Two key factors have driven the recovery in the housing market over the last 12 months. The first is lower mortgage rates, at times up to 160 basis points below the peaks of 2022 and 2023.

"Second is that income growth continues to catch up with the consumer price increases of the past few years. For new mortgages, monthly costs as a percentage of earnings fell from 33% to 29% over the last year. This easing financial pressure has boosted buyer confidence as demand for mortgages reached its highest level in more than two years, with volumes now back in line with pre-pandemic levels, having trailed by around 20% at the start of the year."

Looking to 2025, Halifax is expecting modest house growth across the year, in the range of 0% to 3%, alongside a "further small increase" in the number of transactions.

Despite this, Halifax stated that, as with recent years, forecast uncertainty "remains high given the current economic environment".

Bryden concluded: "Looking ahead to 2025, despite the positive trends we’ve seen over recent months, there’s no doubt mortgage affordability remains a challenge for many buyers.

"While further cuts to bank rate are still on the cards, the pace looks likely to be more gradual than previously anticipated, and many homeowners with older fixed rate deals ending next year face refinancing at much higher rates.

"But with employment conditions remaining positive, buyer demand should continue to hold up well. We expect modest house price growth in 2025, likely a little lower than this year at up to 3%, along with a further small increase in the number of transactions."

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