Despite a number of ups and downs throughout the year, 2024 turned out better than most
expected for the UK property market. Inflation was near, or at, target, for much of the year, and the Bank of England started its interest rate cutting cycle, creating positive momentum that will flow over into the new year.
Below are some of our UK property market predictions for 2025.
House prices are set to rise
According to forecasts from property platform Rightmove, house prices across Great Britain are set to rise in 2025.
Rightmove predicts that national average asking prices will increase by 4% in 2024, their largest prediction for price growth since 2021. The property platform expects that the number of homes for sale will remain high next year, anticipating a higher number of around 1.15 million transactions in 2025.
Mortgage rate reductions in 2025
According to Rightmove the average five-year and two-year fixed mortgage rates are likely to be around 4% by the end of next year, based on current market trends. This is lower than the current 4.8% and 5.08% for the five-year and two-year fixed rates respectively, and will likely help improve affordability and further boost consumer confidence.
Changes to mortgage rates are difficult to predict because they are greatly dependent on the
impact of a wide variety of unpredictable factors, including global financial markets, the cost-of-living crisis, geo-political tensions and inflation.
Stamp duty land tax
In September 2022, the Government announced a temporary increase to the thresholds above which stamp duty land tax must be paid. The temporary increase is due to end on 31 March 2025, meaning the market is likely to see a particularly busy first three months of the year as first-time buyers, home-movers and investors all try to complete planned purchases and avoid higher taxes.
While this date might seem far away, buyers and sellers alike should note that an average
residential property transaction takes between 12 and 16 weeks to complete, and could take
even longer.
From 31 March 2025 the stamp duty rates on a standard residential purchase of a freehold
property for a UK resident will be 2% above £125,000 and up to £250,000, 5% above £250,000 and up to £925,000, 10% above £925,000 and up to £1,500,000, and 12% above £1,500,000.
By completing the transaction before the stamp duty changes come into effect, a buyer can
save a significant £2,500, meaning that it may be worthwhile for residential buyers to bring
forward their property plans and take advantage of the current stamp duty rates before the
increase takes effect.
Rent
Most property experts predict that the supply and demand imbalance across the rental market will persist in 2025, with rents expected to continue rising throughout the year, but at a slower rate and more in-line with the long-run average.
Demand for rental homes has soared since 2020, consistently pushing up average asking rents. Property platform Zoopla found that between 2021 and 2024 average UK rents increased by 27%, with wages only increasing by 19% during the same period. According to their data, the imbalance between demand and supply of rental properties has narrowed, but at the end of 2024 the number of available rentals was still 18% lower than before the Covid-19 pandemic.
This means that landlords advertising properties to rent in the new year will need to find a
balance between growth that reflects their rising costs and what tenants can afford, but that
rental properties are still providing consistent returns on the investment.
Good regions to explore for investment in 2025
Below are some of the key areas worth exploring for property investment in the UK.
Manchester boasts a thriving economic landscape, a growing population of young
professionals, and significant investments in major infrastructure. It has one of the biggest
student campuses in Europe and specific areas like the city centre, Salford Quays, and
MediaCity offer good rental yields and strong potential for capital growth.
Liverpool has undergone substantial regeneration in recent years, making it an appealing
choice for property investors. The city offers a vibrant cultural scene, some top universities, and many job opportunities.
Edinburgh is recognised as one of the most desirable places to buy property in the UK. This
Scottish capital city attracts a significant number of young professionals and students and its
strong rental demand and limited supply have contributed to increasing rent levels and high
rental yields.
Birmingham is a thriving midlands city with a major business sector and excellent transport
links. The city's ongoing redevelopment includes the HS2 station, which is expected to drive rental demand thanks to the increased accessibility it offers to the region and other economic hubs.
As we usher in 2025 the UK property market is primed to offer buyers new opportunities to
invest in property and explore new markets. For those looking to engage with the UK property market, or take advantage before the stamp duty tax changes take effect, Tailor My Property has an expert network of property, mortgage and finance professionals who are able to advise and assist with a wide range of specialist queries.
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