Property Market Predictions for 2025
As we move into 2025, the UK property market is at an exciting crossroads, shaped by shifting economic conditions, policy updates, and a change in the priorities of buyers.
Understanding the trends ahead can offer both clarity and opportunity: from evolving regional hotspots to mortgage rate movements, here’s our overview of the property market predictions set to define the year ahead.
1. House price growth
Analysts anticipate a continued rise in UK house prices throughout 2025, though at a moderated pace compared to previous years. Nationwide Building Society forecasts an increase between 2% and 4%, attributing this growth to sustained demand and limited housing supply. Similarly, Savills projects a 3.5% rise, supported by improving economic conditions and gradual interest rate reductions.
2. Regionality
The North-South divide in property price growth is expected to persist. Regions in the North and Midlands, such as the North West and Yorkshire, are likely to experience more robust price increases, potentially exceeding 4.5%, due to relative affordability and strong demand. In contrast, London and the South East may see more modest growth around 2.5%, reflecting higher price bases and affordability constraints.
3. Mortgage rates and affordability
Mortgage rates are projected to decline gradually in 2025, with five-year and two-year fixed rates potentially dropping to around 4.0%. This decrease is linked to anticipated Bank of England base rate cuts, enhancing buyer affordability and market activity. However, rates are unlikely to return to the historic lows observed in the past decade.
4. Impact of Stamp Duty changes
The scheduled increase in stamp duty rates from April 2025 is expected to influence buyer behavior significantly. A surge in transactions is anticipated in the first quarter as buyers rush to complete purchases before the hike, followed by a potential slowdown post-implementation. This pattern mirrors previous market reactions to tax changes and may introduce short-term volatility.
5. Rental market
The rental sector is set to experience continued demand, with rents for new lets projected to rise by approximately 4% over the year. Affordable regions like Rochdale and Newcastle may witness more pronounced increases, while expensive markets such as London could see slower rental growth.
2025 looks to be an interesting and exciting year for property, and we’ll share insights into the property job market as the year progresses to help you find your dream role.
