The annual rate of house price growth slowed to 4.1% in January, from 4.7% in December, according to Nationwide Building Society.
House price growth showed signs of slowing at the beginning of 2025, according to an index.
The annual rate of house price growth decreased to 4.1% in January, down from 4.7% in December, as reported by Nationwide Building Society. On a monthly basis, house prices across the UK increased by 0.1%, which was lower than the 0.7% rise recorded in December.
The average UK house price in January stood at £268,213. Robert Gardner, Nationwide’s chief economist, stated: “The housing market continues to show resilience despite ongoing affordability pressures.”
He continued: “House prices remain high relative to average earnings, with the first-time buyer house price to earnings ratio standing at 5.0 at the end of 2024, still well above the long run average of 3.9.”
Gardner highlighted the challenges faced by first-time buyers, saying: “Consequently, the deposit hurdle remains high. This is a challenge that has been made worse by the record increase in rents in recent years, which, together with the cost-of-living crisis more generally, has hampered the ability of many in the private rented sector to save.”
He added that it’s not surprising that many first-time buyers rely on help from friends and family to raise a deposit, citing that in 2023/24, around 40% of first-time buyers received assistance in the form of a gift, loan, or inheritance to secure a deposit. Despite numerous obstacles, home ownership in the UK has remained notably stable in recent times.
According to the latest English Housing Survey by the Ministry of Housing, Communities and Local Government (MHCLG), the rate of home ownership in 2024 held steady at 65%. However, ownership rates among younger demographics, especially those aged 25 to 34 and 35 to 44, are still significantly lower than their 2004 highs.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Prices are still under pressure from buyers trying to clamber through the stamp duty holiday window, before it slams shut at the end of March.”
In light of impending stamp duty changes in April, Iain McKenzie, chief executive of the Guild of Property Professionals, observed: “Momentum built up towards the end of last year has carried over into 2025, with market activity bolstered by a rush to complete transactions ahead of the impending stamp duty changes in April.”
Nathan Emerson, chief executive of property professionals’ body Propertymark, added: “Currently, it’s likely a lot of movement in the market is due to people wanting to push through with their purchases and sales before the stamp duty rises in England and Northern Ireland in April.”
After April 1, the “nil rate” stamp duty band for first-time buyers in England and Northern Ireland will decrease from £425,000 to £300,000. Tom Bill, head of UK residential research at Knight Frank, said: “Higher borrowing costs are weighing on buyers but demand still feels artificially strong.
“Sub-4% mortgage offers that pre-date the Budget and an April rise in stamp duty means demand in the first quarter of the year is likely to be more robust than in the second.”
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “For buyers looking to secure the best deal they can, the rapidly evolving market environment can be challenging.
“First-time buyers wanting to escape sky-high rents may be eager to take advantage of slightly better disposable incomes and the current stamp duty thresholds. But with just two months until the stamp duty changes take effect, those that haven’t started the process already may have already left it too late to agree and complete a purchase in time.”
Jeremy Leaf, an estate agent from north London, doesn’t see a shift in affordability issues anytime soon: “Affordability concerns have never gone away. The market remains tight and little change is expected over the next few months at least, irrespective of any possible interest rate reductions.”
Matt Thompson, Head of Sales at Chestertons, a London estate agency, said that the property market experienced a surge in first-time buyer interest in January: “In January, the property market saw particularly high demand from first-time buyers who were motivated to beat April’s stamp duty deadline. This spike in buyer activity led to the majority of properties exchange hands for the asking price although some sellers, especially those in a rush to sell, agreed to enter price negotiations.”