New data from Halifax reveals the average UK house price reached nearly £300,000 at the end of 2024, marking a 3.3% increase year-over-year. This upward trend, however, is accompanied by looming changes to stamp duty, set to impact first-time homebuyers.
The upcoming changes, announced in the Labour's October budget, represent a significant shift in affordability. Currently, first-time buyers enjoy a stamp duty exemption for homes valued under £425,000. This threshold will drop to £300,000 in April, potentially deterring some prospective buyers.
Moving forward, this will increase the cost of purchasing properties for first-time buyers, increasing the cost of entering the housing market.
These changes are expected to motivate some to act sooner, leading to a potential increase in demand. Halifax reports an uptick in mortgage applications reaching the highest level in two years, a trend potentially spurred by falling mortgage rates and rising wages at the end of 2024.
Despite these encouraging signs, affordability remains a concern. Slower-than-expected declines in Bank of England interest rates, following a late 2024 inflation spike, pose a further challenge. While analysts anticipate further interest rate reductions in 2025, the Bank of England governor recently cautioned against precise predictions due to global economic uncertainties.
