2025 Forecast: A new chapter for the UK’s property market
As we bid farewell to 2024, the UK property market has shown remarkable resilience in the face of economic challenges. Let's take a brief look at the year gone by before peering into what 2025 might have in store for homeowners and buyers.
With a year of uncertainty behind us, we take a look at what 2025 could look like for the UK property market.
2024 in review
The past year saw a gradual easing of economic pressures, with the Bank of England making decisive moves to stimulate growth. Interest rates, which started the year at 5.25%, saw two consecutive cuts, landing at 4.75% by November. This downward trend had a positive ripple effect on mortgage rates, with the average five-year fixed-rate mortgage (75% loan-to-value) dropping to 4.7% by year's end.
The autumn general election added a layer of uncertainty to the market, but contrary to popular belief, it didn't dampen activity. In fact, the number of home sales typically increases by 2% in election years compared to the previous 12 months.
Looking ahead: 2025 forecast
As we step into 2025, the property market is poised for what experts are calling a "new cycle". Here's what we can expect:
Price growth resurgence
Rightmove predicts a modest uplift in average asking prices across the country. This growth is expected to be more pronounced in London, with Hamptons forecasting a 4% annual price increase for the capital – its first time outperforming other regions since 2015.
Increased market activity
The year is likely to see a busier property market, with Rightmove projecting around 1.15 million completed transactions. This uptick in activity is partly attributed to anticipated changes in stamp duty, which may prompt a flurry of activity in the first quarter as buyers and sellers rush to complete deals before new rates take effect.
Mortgage rates and affordability
The downward trend in mortgage rates is expected to continue, albeit at a slower pace. This gradual improvement in affordability should support increased market activity and modest price growth.
Regional variations
While London is predicted to lead the charge, other regions are also expected to see growth. By the end of 2025, house prices in every region should have recovered to their 2022 pre-mini Budget peaks.
First-time buyers
The market is likely to see increased activity from first-time buyers, buoyed by more favourable mortgage rates and potential government initiatives to boost housing delivery.
New developments
Labour's "Get Britain Building Again" initiative could see a surge in new housing developments, including the exploration of "new towns". This could present exciting opportunities for both homebuyers and investors.
While the property market never fails to surprise, the outlook for 2025 appears cautiously optimistic. With predicted price growth, increased transaction volumes, and improving affordability, it seems the UK property market is set for a year of steady recovery and growth.
As always, local market conditions can vary significantly, so whether you're looking to buy, sell, or simply curious about your property's value, don't hesitate to get in touch with us here at By Design. We're here to help you navigate the exciting opportunities that 2025 may bring to the property market.
Happy New Year!
Get in touch with us
First Name*
Last Name*
Mobile Phone*
Your Email Address*
Are you looking to*
Please enter message here*
Please confirm that it is okay for us to contact you about this information as well as products and services. (You will always be given the right to unsubscribe at any point in the future)*
