2025 looks bright for the UK property market

With 2024 proving more positive for the UK property market than many experts initially

predicted, 2025 is primed to offer buyers, sellers and investors incredible opportunities,

with widespread predictions of a ‘buyer’s market’ for house hunters in the year ahead

due to increased property availability.

2025 will be a ‘buyer’s market’, but what does this mean?

According to property company Hamptons, transaction numbers for the UK market are

expected to increase this year as a result of first-time buyers, who accounted for a

record 31% of all sales in 2024.

With new buyers currently facing less competition compared to the pandemic-era

markets, they also have a slightly larger selection to choose from, allowing them to buy

the right property at the right price point.

That said, upcoming changes to stamp duty land tax in April could also mean the

current heightened transaction numbers are inflated as a result of a potential rush to

buy property before the changes come into effect.

Stamp duty land tax

Property market professionals are expecting to see the number of house sales increase

over the next few months as buyers try to finalise purchases ahead of the stamp duty

changes scheduled for April.

Changes to the current stamp duty thresholds will see house buyers in England and

Northern Ireland start paying stamp duty on properties over £125,000, instead of over

£250,000, the current threshold. First-time buyers currently pay no stamp duty on

homes up to £425,000, but this will drop to £300,000 in April. As a result, first-time

buyer activity is expected to see a boom as buyers rush to finalise purchases before the

deadline.

That said, it’s worth noting that most transactions can take several weeks if not months

to finalise, and moving ahead soon is recommended for anyone hoping to close before

the new thresholds kick in.

House prices are still on the rise

According to the Nationwide house price index, house prices ended 2024 at 4.7%

higher than at the start of the year, meaning that the average home in the UK cost

£269,426 at the end of December.

Additionally, house prices are forecast to rise by 3% across Britain in 2025, followed by

3.5% in 2026 and 2.5% in 2027, according to Hamptons.

House prices have been following an upward trajectory in recent months due to a drop

in mortgage rates, rising wages and an easing of price inflation, which ultimately puts

less pressure on buyer’s wallets.

Dropping interest rates

The downward direction of mortgage rates in recent months has been a significant force

influencing buyer sentiment, with decreased monthly mortgage costs inspiring improved

confidence amongst prospective buyers, prompting the moderate house price growth

and increased numbers of transactions the market has enjoyed over the past few

months.

Market analysts are widely predicting that the Bank of England will further cut interest

rates throughout the year, possibly as early as next month, allowing lenders to cut the

cost of new fixed mortgage deals. In fact, experts are now predicting that the Bank of

England will cut rates three times by the end of 2025.

This, along with potentially rising wages, should improve housing affordability in 2025.

Tailor my Property

With conditions set up to allow the UK property market to flourish in 2025, there are

certain opportunities primed for property investors to explore further, particularly before

the stamp duty land tax deadline arrives.

Tailor my Property has an extensive network of tax, property and investment

professionals who can assist you with tailoring a strategy best suited to your unique

property market aspirations.