As we usher in 2025, the UK housing market has shown an impressive increase in activity, with house prices rising by 1.7% this month, setting the average national house price at £366,189. This surge is tied to several key factors which are shaping the property landscape early this year.
Increased Market Activity
The beginning of 2025 has seen a spike in housing market activities, marked by the busiest Boxing Day for traffic and new listings recorded. There is an 11% increase in sellers entering the market compared to last year, offering prospective buyers the widest choice at the start of a year since 2015. This enhanced market activity is also reflected in a 9% year-on-year increase in buyers contacting agents and an 11% rise in the number of sales being agreed.
Significant New Year Price Jump
The jump in house prices this January is the largest seen at the start of any year since 2020. This rise coincides with the highest levels of Mortgage in Principle applications seen at the start of any year, indicating a robust intent among many potential buyers to understand and extend their purchasing power in the early stages of the mortgage application process.
Pricing Dynamics and Competition
With an increase in buyer choice leading to more enquiries and agreed sales, there’s also heightened competition among sellers. This environment may lead some sellers to initially overestimate their pricing, potentially leading to price reductions as market realities set in. Despite the recent increase, it’s notable that average asking prices remain £8,942 below the peak observed in May 2024, reflecting ongoing buyer affordability constraints.
Expert Insights
Industry experts suggest that the early months of 2025 could set the stage for a busy spring moving season, traditionally the most active time of year for the housing market. However, the landscape is not without its uncertainties, particularly concerning interest rates and the impending increase in stamp duty starting April 1st.
Colleen Babcock, Rightmove property expert, highlights the affordability challenges faced by many buyers, exacerbated by high mortgage rates and diminishing support schemes for first-time buyers. The potential for early Bank Rate cuts could inject much-needed momentum into the market by reducing mortgage rates and offering more support to first-time buyers, especially in higher-priced regions.
Looking Ahead
The outlook for 2025 suggests it may continue to be a buyer’s market, characterized by a greater choice of homes and potentially longer times to secure a buyer. All eyes will be on the developments around the stamp duty deadline and decisions by the Bank of England on interest rates.
For more detailed analyses and expert predictions for the 2025 housing market, our 2025 house price forecast.
