2025 House Price Forecast

As we approach the end of 2024, the UK housing market is poised for notable changes in the coming year. Recent data indicates a significant decline in house prices, with the average asking price dropping by 1.4% to £366,592 in November. This decrease surpasses the typical seasonal decline, following a modest 0.3% increase in October. Larger homes have been particularly affected, experiencing a 3.3% price reduction. These trends are largely attributed to the recent budget, which raised stamp duty for most home-movers and did not introduce new support for first-time buyers, leading to a seasonal slowdown ahead of Christmas.

Despite these current downturns, Rightmove forecasts a more robust market in 2025, anticipating a 4% rise in asking prices. This optimism is fueled by expected benefits from recent interest rate cuts by the Bank of England. Buyer interest has rebounded, with increased activity levels compared to last year, and seller numbers are at their highest in a decade. Lower mortgage rates are projected to enhance affordability, although the pace at which they decrease will be critical for market activity.

Tim Bannister, Rightmove’s Director of Property Science, notes that while the market is more positive than last year, sellers should remain cautious. The market is expected to remain price-sensitive, with intense competition among sellers due to the high number of homes for sale per estate agent branch, the highest level for this time of year since 2014. Sellers are advised to set realistic price expectations to attract buyers who are both affordability-stretched and have ample choices.

In summary, while the UK housing market faces current challenges, the outlook for 2025 appears promising. Anticipated interest rate cuts and increased buyer activity suggest a potential rise in house prices. However, sellers should remain mindful of pricing strategies to navigate the competitive and price-sensitive market effectively.

Source: Rightmove