The UK property market has proven its resilience over the course of this year, and further improvements to the economic outlook should lead to an equally strong 2025, according to membership body.
Thanks to improving inflation and a reduction in interest rates, 2024 has been a positive year for the UK property market, with house price growth returning to every part of the UK and more mortgages being applied for and approved.
According to Iain McKenzie, CEO of the Guild of Property Professionals, these factors have been a “welcome boost to the property market”, bolstering buyer confidence leading to more sales and rising prices.
Specifically, Consumer Price Index inflation was 2.3% in October, which although higher than the UK’s 2% target, is a significant improvement of highs of more than 11% two years prior; and down from 4% at the start of the year.
This has coincided with the Bank of England bringing the base rate down to 4.75%, from its most recent high of 5.25%, which has sparked confidence among property investors and mortgage borrowers as lenders have also brought their fixed rates down over the course of the year.
Positive outlook for 2025
Most analysts are predicting further interest rate falls in 2025, and this expected to further support appetite in the UK property market, unlocking more mortgage options for buyers and investors. Some forecasts point to the Bank of England base rate hitting 4% or lower by the end of the year.
Any boost to affordability will spur on UK property buyers, particularly those that may have been holding off when mortgage rates were higher in 2023.
Bank of England figures show that mortgage approvals in the UK property sector hit 68,303 in October this year, which was a level not seen since August 2022, and reflects a 42% annual rise in approvals. It is also up 3% on October 2019, demonstrating where the market is compared to pre-pandemic ‘norms’.
Another catalyst could be the upcoming stamp duty changes in April 2025, when the threshold and rates are expected to return to previous levels, upping the bill for many.
McKenzie said: “Upcoming changes to stamp duty thresholds are influencing buying decisions, creating a sense of urgency in the market. Rightmove data shows an uptick in first-time buyer demand in higher-priced areas of the country, as they rush to beat the April deadline.”
UK property sales are on a high
This year has seen a significant rebound in sales activity, with growth in both sellers and buyers coming to the market since last year. According to HMRC figures, there were 100,410 UK property transactions in October, which is the highest seen since November 2022 – a year when both sales volumes and prices accelerated at an unusually fast pace post-Covid.
One area of the sales side that has seen a major increase in some locations is the number of cash buyers – including both homebuyers and investors. This has been exacerbated by higher mortgage rates, with those who are able to buy without borrowing more keen to do so.
With rising sales numbers comes climbing UK property prices, and this has exceeded the majority of forecasts this year, which had predicted a fall of -1.1% by the end of 2024. In fact, the average house price had risen by 1.5% annually in November, according to Zoopla.
The north of England continues to lead in this field, with stronger appetite from mortgaged buyers in particular than the markets in the south and in London. This is likely down to a combination of cheaper property prices in north, as well as improving prospects in many areas thanks to regeneration.
“While London lags behind in terms of annual price growth, the rest of the UK is demonstrating robust resilience,” McKenzie said. “Looking ahead, price growth is expected to build, with consensus forecasts for price growth at 3.4% in 2025 and 4% in 2026.”
He added: “The abundance of choice for buyers means sellers must be strategic in pricing and presentation to stand out,” McKenzie advised. “For those looking to move, the current market conditions offer an excellent opportunity to capitalise on renewed activity and buyer enthusiasm.”
The Guild of Property Professionals says that as 2025 approaches, the property market is “poised for continued recovery, supported by strong buyer demand, improving affordability, and favourable economic conditions”.
