New data from Nationwide reveal that UK house prices increased by nearly 5% in 2024 but remain below their 2022 peak. Relative to income, prices are still nearly 9% lower now than they were then, as the chart below shows. The central scenario in Fathom’s Global Outlook, Winter 2024 sees the path for UK interest rates remaining ‘Higher for longer’; and accordingly we expect the house-price-to-income ratio to continue drifting lower, restraining high levels of house-price inflation. We also estimate that if Labour were to succeed in its ambitious plan to build 1.5 million new houses by 2029, around 5% of total UK supply, this would reduce house-price inflation by one percentage point each year at most. The volume of UK house sales is likely to increase in the first quarter of the year up until a looming cliff edge on 1 April — the date on which Stamp Duty Land Tax rates and thresholds revert to pre-September 2022 levels. On that date the zero-rate threshold is due to halve from £250,000 to £125,000 and for first time buyers to decrease from £425,000 to £300,000.
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