December marked the end of an interesting period for the property market. The 12 months were underpinned by a change to the English Government, inflation closer to 2% and a decreasing base rate. The year was, however, tempered by what might lie ahead in 2025.
Although UK house prices and rental values didn’t soar into the stratosphere, there were modest gains across the board. The year also ended with encouraging sales figures, with the leading portals concurring on a sense of optimism.
Sales agreed hits a four-year peak
Zoopla signed off with news that the pipeline of sales currently working their way towards completion is the largest for four years. The pipeline’s value was some 30% higher than a year ago. Additionally, sales agreed in December 2024 were 23% higher than in December 2023.
House prices hold up well
Ending 2024 with brisk business has reversed the UK’s house price trajectory. Zoopla says property values increased 1.9% during 2024. This is compared to a 1.2% decrease 12 months ago. The portal said the average UK house price ended 2024 at £267,500.
The positivity was also felt by Rightmove. Its final house price index for the year revealed the average asking price in December 2024 was 1.4% above the figure recorded a year ago. The portal says the average new seller asking price is £360,197.
Despite the seasonal lull surrounding Christmas, motivated home movers are propelling the market forwards. In December 2024, Rightmove found the number of sales agreed increased 22% year-on-year. Many will be hoping to complete before the stamp duty change takes effect on 1st April 2025.
There are also signs that buyers are serious about any New Year’s resolution to move. Early birds flocked to the market in December, with Rightmove noting a 13% year-on-year increase in new buyers. We expect the figure to rise in January as we see the result of the traditional ‘Boxing Day bounce’ filter through.
With the 2025 sales market looking positive, what can buyers hope for in terms of house prices, the base rate and mortgage rates? Economic analysts, mortgage lenders and the leading portals are unanimous in their belief that house prices will continue to gently rise. The question is, by how much?
Predictions for 2025
Industry experts used December to share conservative house price predictions. The Office for Budget Responsibility issued the most modest forecast – UK house price growth of 1.1% in 2025. The most optimistic was Capital Economics, who thinks house prices could rise 5%.
Will it be the same for the UK’s rents? Zoopla thinks so. In 2024, the cost of newly agreed rents rose 3.9%, with the average new rent costing tenants £1,270 per month. By the end of 2025, the portal says rents will have increased another 4%.
City rents slowest to increase
Zoopla predicts London and other large cities will post the smallest rental increases, with more affordable towns and villages quickly catching up. For example, rents are rising fastest in Northern Ireland (10.5%) and the North East (8.7%). These two areas currently have the lowest average rents.
All eyes will be on the rate at which landlords exit the buy-to-let market in 2025. With the Renter’s Rights Bill hoping to pass into law, Wales and Scotland both increasing taxes for landlords (Land Transaction Tax for Welsh landlords increased by 1% in December 2024, while Additional Dwelling Supplement increased to 8% for Scottish landlords on 5th December 2024), and purchases becoming expensive in England due to stamp duty changes from 1st April 2025, supply could be further constrained.
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