The outlook for the UK housing market in 2025 appears promising, with new data from Rightmove showing another strong month of growth in property prices.
House values across the country climbed once again, with a 1.7% increase from December to January. This pushed the average asking price up by £5,992, taking it to £366,189 – marking the largest monthly price gain in more than three years.
There’s also been a clear rise in seller activity. Rightmove reports 11% more new listings compared with the same period last year. Estate agencies are now holding more properties on their books than they have in a decade for this time of year, pointing toward a potentially active period ahead for property transactions.
This environment brings wider choices for buyers compared with last year, with a stronger balance between demand and available stock. Buyers may be more selective, focusing on homes with quality finishes or more appealing presentations.
Northern regions drive growth
Consistent with recent patterns, northern parts of England continue to outpace the south in price growth. The North East recorded the highest annual growth at 6.2%, paired with a 2.5% rise in the past month alone.
Yorkshire and the Humber also saw solid growth of 3.8% year-on-year, while the North West reported a 2.9% increase. Despite these gains, property prices in these areas remain relatively affordable, attracting both investors and first-time buyers alike.
Interest rates remain a key factor
Interest rates continue to influence buyer and seller confidence. Inflation has recently fallen to 2.5%, fueling hopes of a reduction in the Bank of England’s base rate from the current 4.75% as early as next month.
In the mortgage market, Money Facts reports that average fixed-rate deals dropped slightly between December and January. The typical two-year fixed rate now stands at 5.48%, with five-year deals averaging 5.25%. This narrowing gap between terms is the smallest seen in roughly three years.
Colleen Babcock from Rightmove commented, “Rightmove’s early-year snapshot shows a promising start to 2025. However, the market needs a boost for that momentum to be sustained, in the form of early and ongoing Bank Rate cuts, which should hopefully help to reduce mortgage rates. Some further support for first-time buyers would also be welcomed, particularly in more expensive areas of the country.”
If borrowing costs decrease this year, many expect property price growth to continue, with more buyers able to afford mortgages.
Improved expectations for the year ahead
In Chester, Jordan Halstead, CEO of Jordan & Halstead Estate Agents, shared that he’s feeling optimistic for 2025 and he said that they have started with a much stronger pipeline of sales compared to early last year.
He added that exchange and completion rates are already picking up following the recent cold weather. He’s observed that sellers are increasingly receptive to valuation advice, acknowledging higher borrowing costs and adjusting their price expectations.
Some buyers are waiting to see if mortgage rates will drop further, which is understandable. But overall, I think we’re on track for a stronger year than 2024. That said, there’s still uncertainty, and a lot depends on decisions made by the government and the Bank of England.
For those considering investing in UK property this year, the current market conditions could present worthwhile opportunities.
Reference: Buy Association
