Average asking prices for newly listed homes in the UK dropped by 1.7% in December, reflecting seasonal trends, according to property website Rightmove. Despite the decline, market activity
remained strong for this time of year, as buyers aimed to complete purchases before property tax increases take effect in April, the company reported on Monday.
Rightmove's data, which is not seasonally adjusted, showed the December decrease followed a 1.4% decline in November, consistent with typical end-of-year patterns. Compared to December 2022, asking prices were up 1.4%. The data for December covered the period from November 10 to December 7.
Sales activity outperformed last year, with the number of agreed transactions rising by 22% and buyer demand increasing by 13%. Meanwhile, seasonally adjusted figures from mortgage lenders Nationwide and Halifax indicated monthly house price increases in November, marking the fastest annual growth in two years.
Impact of Upcoming Stamp Duty Changes
Tim Bannister, Rightmove’s director of property science, noted uncertainty around how upcoming stamp duty tax changes might affect the market in 2025.
"The stamp duty changes are creating uncertainty, with some groups being significantly more affected and therefore eager to finalize deals before the new rates come into effect," Bannister said.
From April, first-time buyers in England will face stamp duty on properties costing more than £300,000 (down from £425,000). Other buyers will pay tax on purchases above £125,000, and the surcharge for second homes will increase.
Market Outlook and Potential Rate Cuts
Bannister suggested that interest rate cuts and falling mortgage rates early in the year could help stabilize the market and boost consumer confidence.
The Bank of England is expected to maintain its interest rate at 4.75% this week, with gradual rate cuts anticipated in 2025. Investors are currently pricing in three quarter-point reductions by the BoE next year.
Government Actions to Support Housing
In a bid to tackle housing challenges and stimulate economic growth, Prime Minister Keir Starmer's Labour government, which took office in July, announced reforms to the planning system last week. These changes aim to accelerate housebuilding and support broader economic expansion.