House prices ended the year on a robust note. A 0.7 percent monthly rise in the Nationwide's index boosted the annual inflation rate from 3.7 percent to 4.7 percent, more than a 2-year high. House prices are now less than 1 percent below their all-time highs recorded in summer 2022.

The 3-monthly change climbed from 1.2 percent to 1.6 percent, underscoring a pick-up in underlying momentum. The labour market remains firm, real earnings growth trending up and mortgage approvals at year end rising above pre-pandemic levels. These bode well for housing demand, but affordability is still stretched with mortgage rates three times the 1.5 percent prevailing in 2021 and house prices high relative to earnings, while record increases in rental growth also make it hard for potential first time buyers to save up for a deposit.

Regionally, Northern Ireland is the best performing area for the second year in a row, putting in an annual price rise of 7.1 percent this quarter, while East Anglia is the weakest performer, rising at a 0.5 annual rate.

Volatility seems to lie ahead in 2025, as upcoming changes in stamp duty from the Budget are likely to boost buying activity in the first three months of the year, with buyers bringing forward their purchases to avoid the additional tax, but also likely to be a restraining factor later in the year, as had occurred in previous stamp duty changes.

The Nationwide House Price Index (HPI) provides house price information derived from Nationwide lending data for properties at the post survey approval stage. Nationwide house prices are mix adjusted; that is, they track a representative house price over time rather than the simple average price.

Home values affect much in the economy especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. During the first half of this decade sharply rising home prices boosted how much home equity households held. In turn, this increased consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.

Although the Nationwide data are calculated similar to the Halifax method Nationwide substantially updated their system in 1993 following the publication of the 1991 census data. These improvements mean that Nationwide's system is more robust to lower sample sizes because it better identifies and tracks representative house prices. Historically, the data go back to 1952 on a quarterly basis and 1991 on a monthly basis.

Over long periods the Halifax and Nationwide series of house prices tend to follow similar patterns. This stems from both Nationwide and Halifax using similar statistical techniques to produce their prices. Nationwide's average price differs because the representative property tracked is different in make up to that of Halifax.