Experts have predicted a “buyer’s market” for house hunters in the year ahead, giving them greater negotiating power as the mood of the housing market shifts to “cautious optimism”.
However, even the more hopeful expectations for 2025 were met with caution, as an important stamp duty relief for first-time buyers was scheduled to end in the spring, as well as potentially high interest rates and taxes bearing down on the market.
Aneisha Beveridge, head of research at the property company Hamptons, said: “As the end of 2024 approaches, the mood of the housing market has shifted from trepidation to cautious optimism.
“Lower mortgage rates have been the principal catalyst for change, falling much more rapidly than we had expected. House prices are moving upwards, reversing the declines of 2023. Yet, while the future direction of interest rates seems to have been mapped out, the pace of this journey and its ultimate destination remain uncertain.”
Hamptons forecast house prices to rise by 3% across Britain in 2025, followed by 3.5% in 2026 and 2.5% in 2027 as the “affordability picture” improves.
The new year could also mark the beginning of a “new housing cycle, when London starts to outperform the rest of the country”, as Hamptons’ housing market forecast predicts 4% price growth in London in the fourth quarter of 2025, outpacing the other regions for the first time since 2015.
Tim Bannister, a property expert at Rightmove, said this would be “driven partly by some major companies mandating a return to permanent office working.
“We think 2025 will continue to be a buyer’s market, which could provide buyers with more negotiating power, given the number of available properties per estate agent is at a decade-high for this time of year.
“There’s less competition amongst buyers than during the pandemic markets, which could provide them with some breathing room to choose the right home at the right price.”
Rightmove recorded its busiest Boxing Day for new seller activity, with a record number of properties listed for sale by agents.
Total buyer demand, measured by the number of inquiries sent to estate agents about homes for sale, was also 20% higher on 26 December than the same day in 2023, as potential buyers capitalised on more choice before a 2025 move.
Transaction numbers were expected to increase, as they did in 2024 thanks to first-time buyers, who accounted for a record 31% of all sales.
However, changes to stamp duty in April could also mean the market is “distorted” due to a potential rush to buy before it comes into effect.
Hamptons’ forecast continued: “While there might be a slight uptick in transactions just before these changes take effect, the overall impact is not expected to cause a significant rush as the potential savings for most movers will be relatively small.
“Overall, affordability is expected to remain the key determinant of the market’s direction, with incomes set to outpace inflation for the second year running, encouraging those who had been deferring relocation to consider moving.”
Source: theguardian.com