12/12/2024
Right Moves 2025 housing market predictions.
2025 is set to be more of a buyer’s market, Rightmove’s 2025 housing market forecast has revealed.
Rightmove predicted that national average asking prices will rise by 4% by the end of 2024.
While this was Rightmove’s largest prediction for price growth since 2021, it remained in-line with average long-term price growth.
The average number of available homes per estate agent branch was at its highest for this time of year in over 10 years.
Rightmove said it expects the number of homes for sale to remain high next year, which means strong competition will remain for sellers, which will likely prevent higher price growth.
However, these factors will also help agreed sales, and Rightmove anticipated a higher number of transactions in 2025, around 1.15 million in total.
Compared with five years ago, the average asking price for a home in London was up by 12%, whilst for Great Britain as a whole, asking prices were up by 21%.
In 2019, the price of a home in London was more than double (+101%) the British average, whereas now the gap has reduced to 86%.
The Brexit year of 2019, and the subsequent Covid influenced years, saw slower price growth for the London sales market.
In 2019, average asking prices fell in London by 0.5%, compared to a 0.8% rise across the UK as a whole.
However, Rightmove said that 2025 could be the beginning of the price turning point for the London market, with the fundamental pull of the capital for both workers and international buyers predicted to start to reassert itself, helped by some major companies heading back to the office five days a week.
Rightmove said it expects London price growth to be in-line, if not marginally ahead, of national price rises.
It also predicted that the average 5-year and 2-year fixed mortgage rates were likely to be around 4.0% by the end of next year, based on current market trends.
This was lower than the current 4.83% and 5.08% for the 5-year and 2-year fixed rates, respectively, and would help improve affordability and further boost consumer confidence.
During this period, Rightmove said 2-year fixed rate mortgages were likely to become even more popular as the gap closes with 5-year fixed rates and it becomes less attractive to fix for longer.
2-year fixed rates have been the more expensive option over the last couple of years, but the gap is currently the smallest it has been this year.
This was reflected in UK Finance data, where the gap in proportion of people taking out a 2-year versus a 5-year fixed rate mortgage has closed compared with last year.
Tim Bannister, property expert at Rightmove, said: “We expect a busier year in 2025, with around 1.15 million transactions completed.
“Stamp Duty charges rising from 1st April means we are likely to see a particularly busy first three months of the year as first-time buyers, home-movers and investors all try to complete on planned purchases and avoid higher charges.
“The effects of Stamp Duty rising will be felt for the rest of the year too, and we may see some negotiation tactics play out, particularly on properties close to the £300,000 mark, as both buyers and sellers try to mitigate their higher costs through the price agreed.”
Matt Smith, mortgage expert at Rightmove, added: “It is likely to be a mixed year for the market.
“Those who took out peak-mortgage rate 2-year fixes after the mini-Budget will see their deal come to an end and will likely find themselves with lower costs next year.
“Combined with wage growth, they may feel some significant affordability improvements.
“By contrast, many movers will be rolling off a relatively low 5-year fixed rate agreed during the busy market of 2020 and will see costs rise.
“With remortgaging and product transfers set to be an important theme for lenders next year, we’ve launched a remortgage rate tracker to show the latest trends in this sector and monitor lender behaviour next year.”
Toby Leek, president of NAEA Propertymark, added: “Following the Government’s recent Autumn Budget, we are expecting to see a potentially busier than usual winter period as many people across England and Northern Ireland look to complete before 1 April when Stamp Duty thresholds change.
“Typically, this will add an additional tax liability of around £2,500 for many people on the purchase of a property.
“In Wales, there have been no changes to the main rates of Land Transaction Tax, but higher rates have increased when purchasing a second property.
“Furthermore, in Scotland, apart from increased rates when purchasing a second home, there are no proposed changes in Land and Buildings Transaction Tax rates and bands when purchasing a main home expected before 2026.
“That said, there are certainly positives to be had looking at the housing market as it stands today, with inflation now back broadly at targeted levels and interest rates creeping back downward as well, which means many people are finding themselves in a much stronger position regarding overall affordability than only 12 months ago.
“As we round off the year, the property market sits in a much more upbeat position and will enter 2025 geared for growth.”
