Property expert issues warning to anyone buying a home in first six months of 2025

A property expert has issued a key warning to anyone who is thinking of buying a home in the first three months of 2025. As we enter the new year, house hunters are being advised on the current state of the property market. House prices ended in 2024 just shy of a record peak, says Nationwide Building Society.

The banking company revealed that annual house price growth accelerated to 4.7 percent in December, up from November's 3.7 percent.



Property values saw an uptick of 0.7 percent month-on-month in December, elevating the UK's average house price to £269,426. But Nationwide's chief economist has now warned that changes in stamp duty this coming spring may cause fluctuations in the market, potentially leading to an increase in transactions early in 2025 followed by a less active period.

Robert Gardner said: "UK house prices ended 2024 on a strong footing, up 4.7 percent compared with December 2023, though prices were still just below the all-time high recorded in summer 2022. Mortgage market activity and house prices proved surprisingly resilient in 2024 given the ongoing affordability challenges facing potential buyers.

" Robert highlighted early-year hurdles such as elevated house prices relative to earnings, which kept the deposit requirements steep, particularly for first-time buyers. He explained: "Moreover, for many of those with sufficient savings for a deposit, meeting monthly payments was a stretch because borrowing costs remained well above those prevailing in the aftermath of the pandemic. "For example, a typical mortgage rate for someone with a 25 percent deposit hovered around 4.

5 percent for much of the year, three times the 1.5 percent prevailing in late 2021, before the Bank of England started to raise the bank rate." UK house prices increased by 4.

7 percent annually in December, ending the year on a strong footing, Nationwide Building Society has reported (Image: © 2025 PA Media, All Rights Reserved) "As a result, it was encouraging that activity levels in the housing market increased over the course of 2024 with the number of mortgages approved for house purchase each month rising above pre-pandemic levels towards the end of the year." Looking ahead, the expert said stamp duty changes from April "are likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax". A temporary "nil rate" threshold for first-time buyers will shrink back to £300,000, from £425,000 currently.

Stamp duty applies in England and Northern Ireland. Robert predicts the changes will lead to a jump in transactions in the first three months of 2025, particularly in March, and a period of weakness in the following three to six months. "This will make it more difficult to discern the underlying strength of the market," he said, "But, providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually.

"As affordability constraints ease through a combination of modestly lower interest rates and earnings will outpace house price growth. The latter is likely to return to the 2-4 percent range in 2025 once stamp duty-related volatility subsides." Nationwide's chief economist highlighted a "clear north-south divide" in England's house price performance for 2024, with the North East, North West, Yorkshire and Humber, and the Midlands outpacing southern England with a 4.

9 percent annual increase. In contrast, southern regions, including the South West, Outer South East, Outer Metropolitan, London, and East Anglia, saw a more modest 2.2% rise year-on-year.

He further noted: "Northern Ireland was the best-performing area for the second year running, with prices up 7.1% over the year." Scotland recorded a 4.

4% increase in 2024, whilst Wales saw a 2.7% year-on-year rise." Discussing property types, Robert observed: "Terraced houses have seen the biggest percentage rise in prices over the last year, with average prices up 4.

4% in 2024." "Flats saw a recovery in price growth, recording their best year since 2021, with a 4.0% rise.

Semi-detached properties recorded a 3.4% annual increase, while detached properties saw a 3.2% year-on-year rise.

" Terraced homes were the best house price performers over the past year, Nationwide said (Image: PA Archive/PA Images) Robert concluded by reflecting on long-term trends: "However, if we look over the longer term, detached homes have continued to have a slight edge over other property types, most likely due to the ‘race for space’ seen during the pandemic. Indeed, since (the first quarter of) 2020, the price of an average detached property increased by nearly 27 percent, while flats have only risen by (around) 15% over the same period." Iain McKenzie, CEO of the Guild of Property Professionals, also weighed in, saying: "While this year is starting on a more positive foot than 2024, it will be interesting to see whether the stamp duty changes do dampen the market to some degree.

Aspects such as further anticipated rate cuts should mitigate the impact, along with the economy’s continued recovery and earnings growth." Here are average house prices followed by annual house price increases in the last quarter of December: Northern Ireland, £197,696, 7.1% North East, £164,696, 5.

9% North West, £218,012, 5.5% West Midlands, £245,173, 4.7% East Midlands, £235,877, 4.

4% Yorkshire and Humber, £207,373, 4.4% Scotland, £187,016, 4.4% South West, £306,730, 2.

7% Wales, £207,187, 2.7% Outer Metropolitan, £422,372, 2.4% Outer South East, £336,224, 2.

3% London, £525,535, 2.0% East Anglia, £272,152, 0.5%.