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According to the latest data from Nationwide, UK house prices increased by 4.7% from the start to the end of 2024.
Nationwide, which provides a significant portion of the residential mortgages available in the UK (being the largest building society in the UK), admitted that the numbers could be seen as somewhat surprising given the ongoing cost-of-living crisis, which has greatly limited the buying power of many new homeowners.
Every region in the UK appeared to experience an increase in house prices across the course of 2024, according to the data. However, some areas experienced growth faster than others.
For example, Northern Ireland saw the most rapid increase in prices. It might also be interesting to note that homes in the north of England experienced more significant hikes in price than those in the south (including in London, which has traditionally led the way in price increases for many years).
Cost-of-living concerns have been exacerbated by the fact that house prices are increasing far quicker than average salaries, which are growing at a significantly lower rate (something Nationwide’s chief economist points out in their press release).
Another major concern is the increase in the cost of renting. While this might sound like less of an issue for those looking to buy a home soon, there is a knock-on effect here. Most people shopping for homes (to buy) are currently in rented accommodation, and so increases in their monthly expenditures mean even less money can be saved up for their house deposit (assuming they are looking for a mortgage), in turn making homes even more unaffordable than they already were.
There are a number of factors to consider here – some specific to 2024, and some indicative of problems that have literally existed in the UK (and indeed some other countries) for decades now.
The most recent factors (which have likely had the biggest impact on this most recent growth) are related to stamp duty – a form of tax which has to be paid when you buy a home. The government is increasing stamp duty rates in April 2025, meaning many buyers have been in a rush to push their purchases through in 2024. Sellers are, of course, aware of this, and so are put in a stronger position in regard to bargaining power, thus leading to buyers having to accept higher prices.
The increase in April comes following Chancellor Rachel Reeve’s budget announcement that the temporary ‘stamp duty holiday’ is coming to an end. The threshold for having to pay stamp duty at the lower end of property prices was previously £425,000. That number is moving down to £300,000 (hugely significant given that a large proportion of UK homes sit in the middle of those two figures, meaning they were not liable for tax before and are now).
Another issue which is very much linked to recent economic affairs is the Bank of England’s interest rate. It has been relatively high for a while, which makes borrowing more expensive in general. Many are hoping that there will be gradual decreases in rates throughout 2025 (hopefully leading to lenders being more generous with their mortgage deals). However, predicting interest rate changes accurately can be a very complicated business.
More broadly, and looking back further to years gone by, the UK has struggled to build enough homes for its rapidly increasing population for a long time. Issues here include limited amounts of land in desirable areas like London, the increasing cost of construction, and restrictions on planning permission (which some view as overly onerous, while others view as completely necessary). Others have, in more recent years particularly, criticised the UK’s welcoming approach to foreign investment, which some suggest has significantly limited the supply of homes available for UK residents.
There are a number of points here for aspiring lawyers (particularly solicitors) to understand. Many of these points would make for excellent conversations at interviews (and indeed on the initial application forms) for opportunities like vacation schemes and training contracts.
Commercial awareness, as a general skill, is key across the legal industry. Understanding how interest rates can the cost of mortgages, for example, is one of the concepts which the lawyers of tomorrow will likely be expected to have a basic grasp on ahead of starting practice (since the issues are so tied up in other parts of the economy).
The issues here are also very widely relevant. Imagine a local, high-street solicitor advising a young couple on their first house purchase – they will need expert, tailored advice on how the increase in stamp duty (something covered in brief on law school courses like the SQE) is likely to affect what they can and cannot afford. As part of the conveyancing process, legal advisors are expected to be able to give some input rather than giving purely legal advice.
At the same time, think about how this story could affect much larger corporate clients (the kind of customers who will be coming through the door at your Magic Circle or elite US firms). Their real estate teams (a very significant practice area for many firms) need to understand how stories like these will affect investment opportunities for the kind of corporate bodies who are active in these areas. This is not to say that the lawyers will be the ones providing the financial advice in itself (as many SQE students should know, lawyers are usually restricted from doing this under FSMA unless one of the limited exceptions apply). However, clients expect their lawyers (especially at this price point) to be at a level where they can engage in conversation with such stakeholders in a deal, and the topics discussed in this article are examples of the kind of trends you need to be aware of.
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