The UK housing market in 2024 is showing signs of change, with slowing growth and clear regional differences in price trends. After years of steady increases, the market is now softening, though the overall picture is still varied depending on location and property type.
We analysed the data from house price indices provided by the Land registry, Office for National Statistics, Gov.UK and Trading Economics to uncover the important trends you need to know.
In July 2024, the average house price in England rose to £306,000, reflecting a 1.6% annual increase. However, this is a slowdown from the 2.4% rise in June, signalling that the market may be cooling. In this piece, we will look at key trends in house prices, the factors driving these changes, and the performance of different types of properties across the UK.
Moderate Growth
In August 2024, the UK House Price Index stood at 504.40 points, up slightly from 502.80 in July. This corresponds to an average house price of £292,505 in August, compared to £291,585 in July. The index provides a standardised way to track house prices, allowing for seasonal adjustments and more reliable comparison of trends.
Looking back to December 2023, the average UK house price was £285,000, £4,000 lower than in December 2022. This marked a 1.4% annual decrease, though it was less sharp than the 2.3% drop seen in the year to November 2023. UK house price inflation has been slowing since peaking at 13.8% in July 2022.
Transaction volumes, which underpin the UK House Price Index, have been lower than usual, affecting the reliability of recent figures. The Office for National Statistics and HM Land Registry are working to improve this, but revisions to recent data have been larger than normal. As a result, the latest figures should be interpreted with some caution.
Semi Detached Houses Popular
House price trends in the UK vary by property type as well as by region. Over the 12 months to July 2024, semi-detached houses in England saw the strongest growth, with prices rising by 2.2% to an average of £295,720. This suggests a potential preference for larger properties, possibly driven by a desire for more space following the pandemic and an increase in remote work.
Terraced houses followed closely, with a 1.8% increase, reaching an average price of £253,527. This indicates that buyers may be showing a preference for these types of homes, which typically offer more space compared to flats or maisonettes.
Flats and maisonettes, however, saw the smallest price growth. Their average price increased by just 0.4%, reaching £251,916. This slower growth could be due to various factors, including an oversupply of flats in some areas, shifting preferences towards homes with outdoor space, or the fact that flat owners might be more affected by rising interest rates, making these properties less affordable.
Regional Disparities
The UK housing market is seeing stark differences in house price growth depending on the region. While some areas are experiencing strong price increases, others are seeing little growth or even a decline.
Northern Regions Leading Growth
The North East of England saw the highest house price growth in the 12 months to July 2024, with prices rising by 3.8%. Other parts of the North have also outperformed the national average, with Northumberland seeing a sharp increase of 9.6%. Cheshire East and Cumberland followed with rises of 7.5% and 7.2%, respectively. This trend suggests that the northern regions are currently benefiting from stronger growth compared to other parts of the UK.
London and Southern Regions Struggling
In contrast, London experienced the weakest performance, with an overall price decrease of 0.4% over the same period. Certain areas in London have seen particularly steep declines. The City of London recorded a dramatic 24.2% fall, while Westminster and Kensington and Chelsea saw drops of 17.9% and 16.5%, respectively.
Potential Causes of the North-South Divide
These contrasting trends point to a potential North-South divide in the housing market. Northern regions may be seeing growth due to greater affordability, as house prices are generally lower than in the South. Remote working trends since the pandemic could also be driving more demand towards the North, where people can get more space for their money.
However, it’s worth noting that in areas like the City of London, low sales volumes may have skewed the data, making the declines appear more dramatic than they are.
Other Regional Trends
Elsewhere in the UK, the West Midlands also saw notable growth, with house prices rising by 2.0% in the 12 months to July 2024. This shows that the housing market is complex, and price movements vary widely across the country.
Buyer and Funding Status Trends
There are two main groups of buyers in England: first-time buyers and former owner-occupiers.
- In July 2024, first-time buyers paid an average of £255,981, a 1.9% increase compared to the previous year.
- Former owner-occupiers, who tend to have more equity from previous homes, paid significantly more, with an average price of £347,775, up by 1.3%.
This suggests that while first-time buyers are still entering the market, their rate of entry is slower than that of former owner-occupiers. Those already on the property ladder seem to be better positioned to manage rising prices.
The way a purchase is funded also affects the price paid. In July 2024, cash buyers paid an average of £286,107, while buyers using a mortgage paid a higher average price of £315,851. Cash buyers often have the upper hand as they can move quickly and may be in a better position to negotiate on price.
Sales and Repossessions
To understand the UK housing market fully, it’s important to look at both sales trends and repossession activity, alongside house price movements. This section breaks down these elements, using information from various sources.
Sales Trends
Reviewing sales volumes helps to gauge how active the housing market is. In May 2024, there were 29,930 property transactions in England, marking a 7.1% drop compared to May 2023. This decline has been ongoing for several months, hinting at a possible cooling off in the market.
However, according to HMRC, property transactions in England rose by 26.4% on a non-seasonally adjusted basis in the 12 months to May 2024. This difference underlines the need to look at multiple data sources to get a clearer view, as different methods and datasets can lead to varying conclusions.
The discrepancy between the UK House Price Index data and HMRC figures is partly due to their differing scopes. For example, the House Price Index excludes transactions involving companies, while HMRC includes them. Additionally, HMRC data may occasionally mix up residential and non-residential transactions, affecting the figures.
Looking closer at local trends, there are noticeable differences across regions. Birmingham saw a sharp fall in sales, dropping from 623 transactions in May 2023 to 423 in May 2024. In London, sales also dipped, with 3,303 transactions recorded in May 2024 compared to 4,835 the previous year, reflecting the wider slowdown in the capital’s property market.
Repossession Sales
Repossession sales, though a small part of the overall market, are a key signal of financial difficulties faced by homeowners. The data shows that in May 2024, the North East had the highest number of repossession sales at 17, followed by London with 10. It’s important to keep in mind that figures for the most recent months may be revised as more data becomes available.
The reasons for regional differences in repossession sales aren’t fully explored in the sources. Factors like local economic conditions, job availability, and the rate of high loan-to-value mortgages might all play a role.
Factors Affecting UK House Prices
Several factors are currently shaping house prices across the UK, both on a national and regional level.
Interest Rates and Mortgage Affordability
The Bank of England’s interest rate decisions heavily influence how affordable mortgages are, which in turn affects the demand for housing. Recently, mortgage approvals reached a two-year high, suggesting that even with rising interest rates, buyers are still active. This indicates that rates have not yet risen to the point where they significantly deter potential buyers.
Inflation and the Cost of Living
High inflation and the cost of living crisis are putting pressure on households, reducing disposable income that could be used for mortgage payments or saving for deposits. This could lower demand for housing. However, despite these pressures, UK house prices have been rising for almost two years. This suggests that other factors, such as a limited housing supply or the ongoing desire for more space post-pandemic, may be offsetting the impact of inflation.
Supply and Demand Dynamics
The balance between supply and demand is central to the housing market. Recently, transaction volumes have been lower than usual, which may affect the accuracy of house price indices. At the same time, issues with data on new build properties suggest that there may be challenges in increasing the housing supply. This combination of uncertain demand and constrained supply makes it difficult to predict where prices will head.
Changing Work Patterns and Regional Demand
The shift to remote work, accelerated by the pandemic, has altered housing preferences and driven regional demand. The North-South divide in house price trends may partly be due to this shift. As more people work from home, they are choosing larger, more affordable homes in areas with a lower cost of living, like the North East. This change could explain the stronger growth seen in these regions compared to London and the South.
Wrapping Up
Looking at the areas we’ve discussed—house price trends, sales volumes, repossession figures, and the strengths and gaps in the data sources—we start to get a clearer view of the UK housing market.
The market shows a mix of both growth and slowdown. House prices have generally been rising again in recent months, with many regions seeing some annual price growth. However, this growth is still slower than in past years. At the same time, the sharp drop in sales volumes raises questions about whether this upward trend can last.
Regional differences are also key to understanding the housing market. London continues to struggle with slower price growth compared to other areas, while regions like the North East seem to be bouncing back more strongly. All in all it’s a mixed picture and it will be interesting to see how this changes as we progress into 2025.
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