The UK housing market is set to experience notable fluctuations in the coming year, driven by various factors such as interest rates, stamp duty changes, and economic conditions. According to Nationwide's recent forecast, the average house price in the UK could see a growth of up to 4% in 2025, adding approximately £10,725 and bringing the average price to £268,144. Even at the lower end of their forecast, a 2% increase is expected. This prediction comes on the heels of a significant uptick in the market, where the average house price increased by 1.2% in the last month alone—the largest monthly rise since March 2022—and an annual growth of 3.7%, marking the most substantial increase in two years.

In anticipation of the upcoming meeting of the Bank of England's Monetary Policy Committee (MPC), the focus is squarely on the state of the economy and the decision regarding the standard base interest rate. The committee's deliberations are highly anticipated, as they will shape the monetary landscape for the near future.

Next year, more than one million homeowners in the UK will be faced with an important financial decision as their current mortgage terms come to an end. For many, this pivotal moment presents a crucial opportunity to remortgage rather than default to their lender's standard variable rate (SVR). This choice is not only a strategic financial decision but also one that could significantly impact their monthly expenses and the long-term financial health of their household budget.

The UK housing market is expected to be busy next year with Rightmove forecasting 1.15 million transactions. The strong demand in the market is forecasted due to the lower cost of borrowing and rising rental costs. However, cheaper borrowing will be the number one reason for motivating home buyers and home movers to shop for property.

In examining yet another report on the UK housing market the question of affordability is at the forefront. Halifax, the largest UK lender, released their most recent data report revealing another record high in the average house price. The month to month increase amounted to 1.3% as the average house price rose in November to £298,083. The annual growth was 4.8%, which is the strongest increase since November 2022. As this is the average UK house price, there are indeed cheaper averages by regions such as in Scotland or Northern Ireland where the average is lower while the average in London is higher.

During the final 2024 meeting of the Bank of England’s Monetary Policy Committee (MPC), the vote concerning the standard base interest rate is expected to result in the decision to hold the rate steady. After two earlier cuts this year, in August and November, the rate was reduced by 0.25% each time taking the base from 5.25%, a sixteen year high, to 4.75%. There had been hope for a third cut by the MPC, especially since inflation had fallen to 1.7% in the twelve months to September and reported in October. This is below the target of 2.0% set by the Bank and the purpose of higher interest rates, however, the next inflation report released last month revealed inflation had grown to 2.3% unexpectedly higher than projected. This stifled any hope of another rate cut in 2024.