What can the New Year expect to bring to the UK property market? Some of the early signs may lie in the current property news headlines. Let’s take a look behind just some of those stories …
Experts predict modest house price growth and falling mortgage rates in 2025
In its edition of the 30th of December, the Scottish Sun offered predictions for the housing market in the year ahead.
It began with an observation about the roller-coaster ride that had characterised mortgage rates during the past 12 months. They had moved quite significantly up and down, settling with an annual average of 5.95% for a 2-year and 5.53% for a 5-year fixed-rate loan, while the Bank of England’s current base lending rate stands at 4.75%.
Analysts say that provided the housing market remains stable and inflation remains under 2%, the year ahead is likely to see further reductions in the base lending rate.
While movements in house prices are more difficult to predict, commentators expect an increase in demand during the first quarter of the year as buyers attempt to beat the coming increase in Stamp Duty. The remainder of the year is likely to remain reasonably flat, with an average increase in prices of around 2.5%.
What’s in store for the 2025 rental market?
It was left to the online listings website Rightmove on the 24th of December to offer its predictions for the rental market in 2025.
The demand from prospective tenants remains high. Although demand has dropped below its recent peak, it is still markedly higher than before the Covid pandemic.
Set against such high rates of demand, however, tenants continue to battle the issue of affordability. Although average UK rents have shot up by some 40% during the past four years, average earnings have risen by only 28% – leaving a significant affordability gap.
After several years of especially steep rent increases, therefore, market analysts predict a relatively “normal” average rise – across the UK as a whole – of around 3% in the 12 months to come.
New revised timetable for Labour’s Renters Rights Bill
The current government’s Renters’ Rights Bill continues to inch forward, reported Landlord Today on the 30th of December.
It is scheduled to reach its Report Stage in mid-January, followed quite swiftly by a third reading of the Bill in the House of Commons.
Together with any proposed amendments to the legislation, the Bill then moved to the House of Lords where a decision and the final enactment into law are expected to be completed sometime this Spring.
Zoopla: December house price index
The online listings website Zoopla published its latest House Price Index recently.
A buoyant housing market in the past 12 months results in the biggest volume in four years of sales awaiting completion – more than 280,000 transactions valued at some £104 billion and an increase of 30% on the previous year’s figures.
Since the Autumn budget, buyers have shown greater price sensitivity and have typically paid less than the asking price. Over the year, house price inflation now stands at +1.9% – compared with -1.2% this time last year.
The website predicts modest house price inflation of 2.5% in the year ahead (just as the Scottish Sun, above) and sales volumes of around 1.15 million transactions.
MPs urge government to boost supply with empty homes
Various housing organisations have joined Members of Parliament in calling for England’s 265,000 permanently empty homes (longer than six months) to be brought back into residential use. This would ease the pressure on local councils that are currently providing expensive temporary housing to more than 123,000 households, according to a story in Property Wire on the 20th of December.
The inter-Parliamentary group and its housing organisation members identified key areas in which action could be taken to bring long-term empty housing back into practical use:
- Reform probate rules to prevent indefinite exemptions from the empty homes premium – a surcharge that enables councils to impose additional tax charges on vacant properties.
- Increase flexibility within the Affordable Homes Programme (AHP) to allow a larger proportion of funding to be allocated towards bringing empty homes back into use. At present, this is capped at 10% outside London.
- Launch a national empty homes strategy to support the delivery of the government’s 1.5 million housing target.
- Introduce a statutory obligation for councils to actively address empty homes as part of their housing responsibilities.
- Revise empty dwelling management orders (EDMOs) to empower councils to take action on empty homes after six months, instead of the current two-year threshold.