Housing shortage outpaces government’s targets as prices continue to rise

According to today’s UK House Price Index from HM Land Registry, UK average house prices rose 4.6% in the year to December 2024, continuing the previous upward trend in November 2024, which saw a 3.9% increase. The average price of property in the UK in December was valued at £268,000. UK house prices have fallen 0.1% since November.

The latest regional data continued to show significant regional variations in prices across the UK, with the Northern Ireland, Scotland and the North East leading the way with the highest annual growth of 9.0%, 6.9% and 6.7% respectively. In contrast, London house prices flatlined in year to December with 0% growth. The monthly change in London was -0.3% highlighting affordability concerns in areas with the highest house prices.

Peter Graham, partner at leading audit, tax and consulting firm RSM UK, comments: “Overall prices have maintained the upward monthly trend which will please homeowners looking to sell but perhaps not those looking to get a foot on the housing ladder, especially with continuing higher mortgage rates than a few years ago. London house prices have now declined again with zero annual growth, at the same time there have been further monthly increases in many regions with the South East, North East and Northern Ireland being the stand out monthly performers. “

“The upward trend in house prices is likely to continue in 2025, given the shortage of residential properties available which is reflected in reduced sales volumes in the year to October 2024. The government says it is committed to hit its annual housing target of 300,000 homes per annum, but gloomy forecasts remain in the short term with the Home Builders Federation warning in January of a record-low number of planning permission approvals between July and September last year. Until the volume of residential properties being built increases to the government target, we expect prices will continue to rise.”