House Prices going into 2025

[Twiglets1]

We often refer to House Price Indexes (HPIs) in discussions re house prices but there are several out there so which to use?

If you want to know average asking prices use the Rightmove HPI and the price will be for the entire-market in England & Wales.

If you want to know average selling prices it's either the Halifax or Nationwide HPIs but they only have data on buyers who have mortgages approved with them in the UK, so cash buyers for example will be excluded.

The Office for National Statistics HPI is arguably the most accurate as it publishes sold prices on all transactions in the UK (mortgages & cash). However, there is a delay so the data is at least a couple of months behind.

Anacdata HPI also covers mortgage & cash transactions and is the first to report regional monthly selling prices, but only covers England & Wales.

I will kick the thread off by looking back at house prices over the past 10 years with a table posted by Anacdata in December 2023.

They say: The table shows regional house price growth over the past 1, 5 and 10 year periods. In particular, we show the different changes in price experienced by the different regions over the 10 year period, during which the South West has seen the highest growth in prices. The East Midlands follows whilst the North East shows the lowest growth. Over the last five years all regions have seen prices rise, with Wales topping the league table, followed by the North West. Over the last year, almost all regions have seen prices fall, with Scotland breaking even and the North East gaining slightly.

According to their data, prices fell by 3.9% as an average across all regions in the year Dec 22 to Dec 23. Will be interesting to see what they publish in Dec 24 to reflect the current year.

https://www.acadata.co.uk/assets/uploads/2024/02/Ranked-Growth-to-Dec-23.pdf

Acadata for October out today Twiglets. First rise since April (+0.2%). Its a pity that it doesn't seem to get any media coverage, as it does appear to be the most comprehensive of the surveys.

Thanks @Lastwhisper

I will take a look later & post the summary.

October Key e.surv Acadata HPI (England and Wales) Statistics

Average House Price
£354,822
Monthly Change
0.2%
Annual Change
-3.4%

Main points
Short-term picture improves

• Housing market shrugs off September’s malaise
• Budget stamp duty measures will boost activity in coming months
• Southern England continues to hold back wider market recovery

https://www.acadata.co.uk/services/house-price-index/

Anacdata news release includes many more details about regional variations. And highlights the fact that the annual percentage change in house prices if you excluded London and the SE would be minus 2.6%.

www.acadata.co.uk//assets/uploads/2024/11/e.surv-Acadata-England-Wales-HPI-October-2024.pdf

UK house price growth quickens but budget clouds outlook, RICS survey shows

British house prices rose in October at the fastest pace in more than two years, according to a survey that on Thursday that mostly reflected sentiment before finance minister Rachel Reeves published her budget at the end of the month.

The Royal Institution of Chartered Surveyors said its house price balance rose to +16 from +11 in September, its highest level since September 2022, when the economic plans of former prime minister Liz Truss sent mortgage markets into a spin.

RICS' survey was conducted between Oct. 21 and Nov. 7, with about two thirds of the responses coming before Reeves announced a budget on Oct. 30 that contained big increases in tax, spending and investment. While RICS said the outlook painted by the survey was brightening - with price expectations for the next three months at +20 in October, up from +12 in September - that could yet change.

"The rise in bond yields following the Budget, alongside a general increase in interest rate expectations over the past couple of weeks, will likely present something of a headwind for the market to contend with over the short term," said Tarrant Parsons, head of market analysis at RICS.

The Bank of England cut interest rates last week for only the second time since 2020 and said future reductions were likely to be gradual as it predicted the new government's first budget would lead to higher inflation and economic growth.

RICS said the picture appeared to be worsening for renters, with demand remaining strong but rental properties disappearing from the market.

Mortgage lenders Halifax and Nationwide both reported monthly increases in house prices during October.

https://www.reuters.com/world/uk/uk-house-price-growth-quickens-budget-clouds-outlook-rics-survey-shows-2024-11-14/

“something of a headwind for the market to contend with over the short term”

I have to smile at their narrative.

Asking Prices Dip In November But Outlook Is Positive, Says Rightmove

The average asking price of new properties coming onto the market has dropped by 1.4% in November...It is usual for asking prices to fall back a little at this time of year, when the housing market tends to be quieter. But this month’s fall was bigger than the seasonal average at 0.8%, according to Rightmove.

Annual prices however, have increased by a nominal 1.2%, with the average UK asking price now standing at £366,592. The number of sales being agreed is also up by more than a quarter (26%) compared with the same period in 2023 while the number of new sellers is 6% higher.

Rightmove’s real-time data also shows some early signs of an uptick in buyer demand following November’s interest rate cut by the Bank of England with demand 23% higher than the same time last year. However, estate agents now broadly predict that, as usual, activity will tail off towards Christmas.

Rightmove’s forecast for 2025 is for average asking prices to rise by 4%. This is the highest prediction since 2021. It is expected that lower mortgage rates should release some of the pent-up demand for house buying and selling, which in turn could put modest upward pressure on asking prices.

Regionally, prices are up year on year in all areas except for the South West and South East of England, where they have fallen by 0.5% and 0.1% respectively. The average asking price in the South West stands at £374,909, and at £471,477 in the South East.

Prices have risen by the most in the past year in the North East of England. Average asking prices have now hit £189,694 – a 4.3% annual rise.

In Scotland prices are up 4% year on year with average asking prices at £193,179, while in Wales annual prices have risen by 2.3% to reach £260,096.

Asking prices in the capital stood at £683,316 in November – a 1.5% uplift on last year.

www.forbes.com/uk/advisor/personal-finance/2024/11/18/house-prices-updates/

UK House Price Index for September 2024

The September data shows:

• on average, house prices have fallen by 0.3% since August 2024
• there has been an annual price rise of 2.9% which makes the average property in the UK valued at £292,000

In England the September data shows, on average, house prices have fallen by 0.1% since August 2024. The annual price rise of 2.5% takes the average property value to £309,000.

• The North East experienced the most significant monthly increase with a movement of 2.4%
• Yorkshire and the Humber saw the greatest monthly price fall, with a fall of -1.7%
• The North East experienced the greatest annual price rise, up by 6.5%
• London saw the lowest annual price growth, with a rise of -0.5%

Wales shows, on average, house prices fell by 2.2% since August 2024. An annual price increase of 0.4% takes the average property value to £217,000.

https://www.gov.uk/government/news/uk-house-price-index-for-september-2024

Wow - New build prices up 22.3% since July 2023

Is there a way to strip this out of the figures for existing houses?

I don’t know. Does seem crazy about the increase in new build prices, I don’t understand why that has happened.

UK house prices jump 3.7% in November

UK house prices rose much more than expected in November and at the fastest pace in two years, helped by solid wage growth and declining mortgage rates, according to figures from lender Nationwide.

The price of a typical UK home rose 3.7% year on year in November, up from the 2.4% recorded the previous month and marking the fastest rate of annual growth since November 2022, Nationwide said.

House prices were up 1.2% month on month, taking the average cost to £268,144 — just 1% below the all-time peak in 2022. Economists polled by Reuters had expected a 0.2% rise month on month and a 2.4% annual increase.

Robert Gardner, Nationwide’s chief economist, said: “Solid labour market conditions, with low levels of unemployment and strong income gains, even after taking account of inflation, have helped underpin a steady rise in activity and house prices since the start of the year.
“Household balance sheets are also in good shape with debt levels at their lowest levels relative to household income since the mid-2000s,” he added.

Gardner said that the pick-up in prices was unlikely to be related to the stamp duty changes as the majority of mortgage applications commenced before the Budget announcement. However, he added that gauging the underlying strength of the market “will be more difficult” in the coming months as the upcoming stamp duty changes would provide an incentive for buyers to bring forward house purchases to avoid paying additional tax.

https://www.ft.com/content/a346774f-dffc-4988-a75d-df057e9e7d4a

Wonder if it’s because building costs/materials so high that there is much more of a demand for new builds requiring no work?

Having just spaffed a load of money on our pre-1900’s house to extend/renovate I can well understand it if so!

Maybe… it does seem that those renovation costs have rocketed since Brexit

With new builds it is quite easy to negotiate i.e, stamp duty being paid by them etc. For the last one we've considered we managed to negotiate stamp duty plus 10k towards our deposit from the developer.

So as long as new buyers can still get a mortgage they don't care about the property price as much, they worry after when nobody wants to buy a second-hand flat for the price of the house. In general, new developments will rather throw in various perks/extra money to make up the shortfall the buyer can't afford. So, on paper it looks like the price of the property sale is high, but with all the expenses they have to incur to sell, profit is actually lower. Price statistics don't take that into consideration, so there you have it, biased statistics that induce FOMO!

Just random first example from google search and there's a lot of them
thakeham.com/new-homes/incentives/stamp-duty-paid-homes/

Rightmove House Price Index December 2024:

• New seller asking prices drop by a seasonal 1.7% (-£6,395) this month to £360,197, in line with the usual December monthly fall, with sellers’ pricing power diminishing as Christmas approaches:
• Prices end the year 1.4% above December 2023, and Rightmove predicts that new seller asking prices will rise by 4% next year, with forecast mortgage rate drops set to further improve affordability and stimulate market activity
• Despite the festive lull, activity remains substantially stronger than the same period a year ago, with the number of sales being agreed up by 22%, and new buyer demand up by 13%
• Some movers are now waiting for the traditional Boxing Day bounce on Rightmove:
• Boxing Day 2023 saw a record number of new sellers launching to the market for that time of year, providing fresh property choice for buyers, while buyer demand jumped by 273% between the Christmas Day lull and Boxing Day
• Rightmove’s real-time data also captures the impact of the looming stamp-duty deadline on March 31st 2025:
• Sellers of smaller properties in higher-priced areas are trying to beat the deadline to avoid higher tax
• Prices are holding up best in the first-time-buyer sector, especially homes priced below the £300,000 threshold
• Despite the signs of a stronger 2025, headwinds remain, with the impact of Budget measures being a challenge

https://www.rightmove.co.uk/news/house-price-index/

Do these figures allow for inflation?

No, the index uses actual asking prices not adjusted for inflation.

So not likely to be an increase then.

I forecast that the Halifax, Nationwide, Rightmove and Zoopla will all show a small increase in annual house prices at the end of 2025.

What is the point of showing ASKING prices though, as Rightmove always do? Sellers could be really out of sync, have to slash their prices after a while etc. Surely sold prices would be a truer reflection of what's actually happening? Asking prices doesn't tell you much after all. It's misleading, and I think a lot of people don't get this if they just look quickly.

Although I realise the figures for completed sales might take months to come through, after all the conveyancing is completed.

I don't think any company should just use initial asking prices and ignore subsequent reductions. It does mislead as its not a true asking price index.

Other indexes tell us sold prices though, like the UK HPI, Anacdata, the Nationwide or Halifax index.

Personally I agree that the Rightmove index is the least useful index. But I think you’ve touched on its strength which is that the data is available sooner than the ones that measure the price of completed sales. Maybe it measures sentiment more than anything?

What's people's predictions for next year then? I think further stagnation in real terms but a slight rise in prices.

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