UK house prices rose more than expected in December.

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UK house prices rose more than expected in December, according to Lender Nation, as buyers rushed to close deals ahead of a stamp duty hike in April.

Prices rose by 0.7 per cent compared with November, compared with a 0.1 per cent rise expected by economists, taking the average house price to £269,426, below the 2022 peak.

Nationally, home prices rose 4.7 percent in December from a year earlier, the fastest annual pace since October 2022 and a 3.8 percent increase that economists had expected.

“Mortgage market activity and home prices look surprisingly strong in 2024 given the affordability challenges facing buyers,” the nation’s chief economist, Robert Gardner, said on Thursday.

Nicky Stevenson, managing director at estate agent group Fine & Country, said: “House prices continue to defy expectations, although the usual seasonal slowdown has eased and house prices have continued to rise.”

This reflects strong demand as buyers move quickly to find deals ahead of the stamp duty threshold change in April 2025.

Chancellor Rachel Reeves confirmed in the Budget that a temporary stamp duty holiday would end in March, leading many analysts to expect a rush of transactions earlier. From April, first-time buyers, for example, will start paying tax on properties of £300,000 or more, rather than the current £425,000.

Borrowing rates were increased in November after the Budget, reflecting expectations that the Bank of England will cut borrowing costs more slowly than previously forecast.

However, borrowing costs remain well below last summer’s peak. The two-year fixed rate with a 60 percent mortgage was 4.39 percent in November, according to data from the Bank of England. It was up from 4.21 percent in October but below the 6.22 percent reached in July 2023.

Alex Kerr, economist at Capital Economics, said: “The post-Budget release of the National House Price Index suggests that the increase in demand was a bit more post-Budget. “It is remarkable that the increase in demand seems to have offset the recent rise in mortgage rates.”

House prices rose in all regions in the last quarter of 2024, with Northern Ireland at the fastest annual rate of 7.1 per cent, according to a national report.

However, the lender reported that there was a “clear north-south divide” in house price performance in England by 2024, with a 4.9 per cent rise in the north and a 2.2 per cent rise in the south.

Gardner expects UK house prices to rise between 2% and 4% by 2025.

He also predicts that the housing market activity will gradually strengthen and “buying restrictions will decrease due to the combination of moderately low interest rates and incomes in combination with house price growth.”