Predictions for the UK Housing Market in 2025

By Steve Cook – Clarke Gammon

Will interest rates fall? Will landlords continue to sell? And what will the new stamp duty deadline mean?

We look at some of the predictions for the 2025 property market from across the media?

Mortgage Interest Rates

Mortgages are likely to be the key to the strength of the property market in 2025.  Interest rates fell slowly in 2024, dropping from 5.93 to 5.48 per cent for a two-year fixed rate and 5.55 to 5.25 for a five-year deal.

The fall in interest rates ground to a near-halt after the October 30 budget, which the Office for Budget Responsibility said could stoke inflation, leading the Bank of England’s (BoE’s) monetary policy committee to hold its base rate at 4.75 per cent in December.

Hopes of an early cut in rates initially appeared to be dampened by a rise in yields on UK government bonds earlier in January, but the recent fall in inflation has reignited the media’s confidence in a rate cut, this will ultimately be decided by the BoE’s Monetary Policy Committee on the 6 February.

What are Economists saying? A recent poll of 51 economists carried out by the Times predicts that the Bank of England will be forced to cut rates at least four times this year to boost flagging economic growth – an improvement on the previous widespread predictions of two cuts. Whether this comes to pass will have a huge impact on the market, particularly in the southeast as homes are more expensive.

Prediction – The mortgage interest rate prediction for 2025 is that new rates will average just above 4 per cent by the end of 2025 (with a £25k deposit).

Stamp Duty

From 1st April stamp duty tax will start at a purchase price of £300,000, rather than the current £425,000, for first-time buyers. For those who are not first-time buyers, the threshold will go down to £125,000 from £250,000. Data from the property portal Rightmove suggests that from April 1 only 8 per cent of homes in London will not incur stamp duty for first-time buyers, while 24 per cent of homes in the southeast would be stamp duty-free.

In all probability, unless buyers have already agreed to buy a home and have made significant progress along the often tricky path to completion, there’s little chance of making the 31st March deadline, as the time this process takes is generally 4-6 months if not longer, and there is sure to be a very big bottleneck as we approach the deadline.

Robert Gardner, the chief economist at Nationwide, said the spring deadline this year was “likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax”. However, buyers may discover that a stamp duty holiday is a con. These periods of tax discounts almost always drive property prices up so that, in the past, many bargain-hunters have ended up paying more for properties than any relative saving made on stamp duty.

Ray Boulger from the mortgage broker John Charcol said on a typical £500,000 property, the extra stamp duty would make up only 0.5 per cent of the purchase price and so even a small decline in prices after April 1 would make rushing to beat the March 31 deadline a false economy.

First Time Buyers

One of the government’s aims in 2025 is to free up building land for first-time buyers, who make up 49 per cent of all purchasers nationally, one of the highest proportions ever, and in some areas, like Manchester (75 per cent) and Slough (73 per cent).

First-time buyers cashing in on landlord sales will be a big story in 2025. A recent report confirmed that in 2024, the proportion of properties sold by landlords which were bought by first-time buyers was at its highest level, 35 per cent, up from 16 per cent in 2016.

First-timers also benefited from an unprecedented wealth transfer from their parents, a trend that is certain to continue in 2025. Gifts and loans from the Bank of Mum and Dad totalled £9.3 billion in 2024.

Prediction – The prediction for 2025 is that The Bank of Mum and Dad will hand a record £10bn to their kids this year.

The Prime Market

The Prime (top end of the market) is generally unaffected by mortgage interest rates but with the recent government changes in non-dom status and changes in taxation, such as the introduction of 20 per cent VAT on private school fees, is likely to have a negative impact.

Another disincentive will be a raft of taxes for holiday homeowners, which contributed to a sharp fall in demand for pricey country houses in 2024. Agents also reported a growing sell-off of second homes in Cornwall, Norfolk and Dorset due to plans for massive council tax increases that are due in April.

With many of the Super Prime property buyers coming from overseas, Labour’s decision to end non-dom status has led to a near-collapse in parts of the super-prime property market in Central London.

Recent analysis showed a sharp fall in sales of homes worth more than £15 million last year. A total of 40 such homes sold in 2024, compared with 54 the year before. The total value of the homes that did sell fell 34 per cent to £856.5 million, compared with £1.3 billion in 2023.

Prediction – Those selling London and home counties properties in the £1.5 million to £2 million bracket may have more luck, however. Because of the shortage of quality family homes in affluent suburbs, this is likely to result in the best of these properties selling quickly, particularly if buyers are priced out of private schools in larger numbers and looking nearer to good state schools.

Also in 2025, there may be an influx of liberal Americans fleeing due to the Donald Trump administration…

Recently Listed homes

Here are a selection of some of our most recently listed homes for sale –

House for Sale in Haslemere – Guide Price £1,450,000

New House for Sale in Guildford – Guide Price £1,325,000

 

House Sold in Haslemere – Guide Price £1,200,000 

House for Sale in Liphook – £495,000

House for Sale in Liphook – Guide Price £895,000 

Flat for Sale in Guildford – Guide Price £365,000 

To see the very latest homes coming to the market, click ‘New to market homes’, this lists all of the very latest homes as they come to the market.

Considering a Move in 2025?

With stronger than expected demand for properties in January, we have demand for property in and around the towns and villages covered by our offices in Guildford, Haslemere and Liphook with many motivated buyers looking for a new home.

If you are considering a move please feel free to contact any of our offices, either for an informal chat about the market and how we might help you with this or to book a market appraisal.

Why not try our instant online valuation tool?

Steve Cook FNAEA Senior Consultant –  Clarke Gammon

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