House price rises have defied predictions - and the market is set to change even more, according to a property expert
House prices have soared in some regions
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The housing market looks set for a strong start in the New Year, which will come hot on the heels of price rises that have defied the predictions of many.
Nationwide has reported a 3.7 per cent year-on-year increase and this is despite economic uncertainty and political turbulence with elections here and overseas.
The building society said it was a surprising finding, given that affordability remains stretched by historic standards. The end of stamp duty relief in April of 2025 will see a flurry of activity in the first two months of the year.
Bank of England figures have also added to the rosy picture of prices and revealed that mortgage approvals are at the highest levels since August 2022.
Property prices have increased unexpectedly in recent months
PAThe momentum is being sustained because the market is being underpinned by low levels of unemployment and pay rises that are outstripping inflation.
Changes made by the Government mean that stamp duty will be payable on properties valued over £125,000 in April, instead of £250,000 at present, so this will have played a role as well.
It is also worth noting that stamp duty relief for first-time buyers will reduce in April as well, with the limit dropping from £425,000 to £300,000.
The market is expected to strengthen gradually as people’s spending power is boosted by higher pay and lower interest rates.
There are clouds on the horizon, as high prices and relatively high interest rates are expected to affect affordability still further. Mortgage rates have edged up recently on the expectation that interest rates will not be reduced as quickly as expected.
There are millions of people who will see their mortgage payments increase over the coming years, as their fixed-rate deals end.
Indeed, the Bank of England estimates that 4.4 million people will be paying more by 2027. Still, I predict that Boxing Day will again be one of the busiest online days in property.
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Jonathan Rolande shares his insightsJONATHAN ROLANDE
Last year 10,000 properties went live – the highest number in one day since 2011. I suspect the figure will be even higher this year. Prices haven’t increased by very much, especially when compared to inflation in other sectors such as food or energy.
But, coupled with slightly lower mortgage costs compared to their recent peak, buyers are seeing real value out there. Rents have continued to go up, meaning that buying a home is often a cheaper option.
This, and the stamp duty holiday, are prompting many younger buyers to look now, fearing they may otherwise miss the boat.
Jonathan Rolande is a property expert from the National Association of Property Buyers
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