With talk of a “buyer’s market” coming into play in the year ahead, will the momentum gained in the UK property market continue to drive sales in 2025?
After a decidedly cautious 2023 for the UK property market, the past year has seen a return of appetite and optimism from homebuyers, property investors and sellers pushing ahead with purchases.
Sales volumes ended in a significantly stronger position for 2024, thanks to both a boost in the number of properties being listed for sale, and a return of buyer interest. This was spurred on by improving mortgage rates over the course of the year, along with wage growth and lower inflation levels.
According to the latest data from Zoopla, the number of sales agreed by estate agents hit 6.1 per month (per agent) over the first 11 months of 2024, which was the highest number seen since 2021, when the market accelerated in the aftermath of the pandemic.
The pipeline of sales agreed, which will be working their way towards completion in the first half of 2025, is also at a four-year high, says the property portal, with an estimated 283,000 UK property sales worth a total of £104bn expected to complete in H1. This is up 27% than 12 months ago in terms of volume, with a 30% uplift in value.
“Sales market activity has rebounded over 2024 as buyers and sellers return to the market,” said Richard Donnell, executive director of research at Zoopla. This has boosted sales volumes, but buyers remain price-sensitive, especially in the wake of the Budget and uncertainty over the outlook for mortgage rates in 2025.”
Buying power boost for UK property
There are plenty of positive markers taking the UK property market into 2025, creating much more optimism than buyers and sellers faced this time last year.
Although interest rates had been predicted to fall further, they have reduced over the course of 2024 from 5.25% to 4.75%, and this has coincided with cheaper mortgage rates – which is one of the biggest drivers of appetite when affordability is one of the most prominent issues affecting the market.
As of 27th December, the average two-year fixed rate mortgage was 5.4808%, according to data from Moneyfactscompare, which is down from 5.9441% on 27th December 2023. Analysts are predicting the Bank of England to further drop interest rates over the course of this year, spurring on appetite from buyers.
House prices have also strengthened over the course of the year, albeit at a much faster rate in the north than in the south, on average.
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.”
Taking the pressure off
Zoopla’s latest report notes that buyers in the UK property market became more price-sensitive during the final months of the year. This was partly due to a more rocky outlook for mortgages, with inflation remaining slightly above the 2% target; while uncertainty over how the Budget would affect the economy was also at play.
The outlook from the property portal is that it will remain a buyer’s market through 2025, but with “sufficient house price inflation to support more home moves”.
