Bank Of England Update: December 2024

Interest Rates Steady at 4.75%: A National and Warrington Perspective

In a move that surprised absolutely no one, the Bank of England has decided to keep the base interest rate at 4.75% during its latest Monetary Policy Committee meeting. This decision, anticipated by economists and tea leaf readers alike, aims to balance the UK's economic growth with the ever-elusive 2% inflation target.

National Market Sentiments and Trends
Nationally, the UK housing market has been on a roller coaster that seems to have more ups than downs. According to Halifax, average property prices reached a record high of £298,083 in 2024, marking an annual growth of 4.8%. This surge is attributed to lower mortgage rates and strong wage growth, which have collectively given buyers the confidence to dive into the property pool. However, Halifax cautions that this trend may not continue into 2025, with expected house price growth slowing to up to 3% due to more gradual declines in interest rates.

Nationwide echoes this sentiment, forecasting a 2% to 4% rise in house prices for 2025. They note that while borrowing costs are easing and affordability is improving, the upcoming changes in stamp duty could introduce some market volatility. Specifically, the reduction of the stamp duty band for first-time buyers in April is expected to cause a surge in transactions early in the year, followed by a potential slowdown.

Warrington's Local Market Dynamics
Zooming in on Warrington, the local housing market has mirrored national trends but with its own unique twists. The town has experienced steady demand, particularly from first-time buyers and young families attracted by its strategic location between Manchester and Liverpool. Local estate agents have reported a slight increase in property listings, suggesting that sellers are keen to capitalise on the current market conditions before the anticipated stamp duty changes take effect.

However, affordability remains a concern. While lower interest rates have made mortgages more accessible, the rise in property prices means that buyers still need substantial deposits. This has led to a competitive market, with well-priced properties often receiving multiple offers.

Industry Expert Insights
Amanda Bryden, head of Halifax Mortgages, notes, "Looking ahead to 2025, despite the positive trends we’ve seen over recent months, there’s no doubt mortgage affordability remains a challenge for many buyers. While further cuts to bank rate are still on the cards, the pace looks likely to be more gradual than previously anticipated, and many homeowners with older fixed-rate deals ending next year face refinancing at much higher rates."

Robert Gardner, Nationwide's Chief Economist, adds, "This will lead to a jump in transactions in the first three months of 2025 (especially in March) and a corresponding period of weakness in the following three to six months, as occurred in the wake of previous stamp duty changes."

12-Month Outlook and Forecast
Looking ahead, the crystal ball (or rather, the collective wisdom of economic forecasters) suggests a period of modest growth for the UK housing market. Savills projects a 4% increase in UK house prices for 2025, with cumulative growth of 23.4% over the next five years. They attribute this to anticipated steady cuts to the base rate, which should improve affordability.

However, potential challenges loom on the horizon. The planned stamp duty changes in April 2025 are expected to create short-term volatility, with a rush of transactions followed by a potential slowdown. Additionally, while interest rates are expected to decrease gradually, they may not return to the historic lows seen in previous years, meaning that mortgage affordability could remain a pressing issue for many buyers.

In Warrington, these national trends are likely to play out with local nuances. The town's strong appeal to commuters and families suggests that demand will remain robust, but affordability constraints could temper the pace of price growth.

Conclusion
In summary, while the Bank of England's decision to maintain the base rate at 4.75% provides a stable backdrop, the housing market is set to navigate a series of twists and turns in the coming year. Buyers, sellers, and estate agents in Warrington and beyond would do well to keep their seatbelts fastened and their property listings up to date. After all, in the world of real estate, as in life, change is the only constant.

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