The UK housing market is forecast to become a “buyer’s market” in 2025, granting house hunters more negotiating leverage as the sector transitions to a mood of “cautious optimism.”
However, market watchers remain wary of challenges, including the impending end of stamp duty relief for first-time buyers, persistently high interest rates, and taxation pressures.
Optimism Tempered by Uncertainty
Aneisha Beveridge, head of research at Hamptons, highlighted the shifting sentiment in the housing market:
“As 2024 draws to a close, the market’s mood has moved from trepidation to cautious optimism. Lower mortgage rates have been the key driver, falling more sharply than expected.
House prices are now rising, reversing 2023’s declines. However, while the trajectory of interest rates appears clearer, the pace and ultimate destination remain uncertain.”
Hamptons predicts house prices will grow by 3% across Britain in 2025, followed by 3.5% in 2026 and 2.5% in 2027, as affordability improves.
London Set to Lead Price Growth
A potential turning point for the housing market is the beginning of a “new housing cycle,” with London expected to outperform other regions for the first time in a decade.
Hamptons projects a 4% price increase in London during Q4 2025, driven partly by major firms mandating a return to office-based work.
Tim Bannister, a property expert at Rightmove, commented: “2025 will likely remain a buyer’s market, giving house hunters more negotiating power. With the number of available properties per estate agent at a decade-high, buyers face less competition than during the pandemic boom, offering them breathing room to secure the right home at the right price.”
Boxing Day Surge Highlights Buyer Demand
Rightmove reported record activity on Boxing Day 2024, with a surge in new property listings and a 20% year-on-year increase in buyer inquiries. This spike reflects a growing eagerness among buyers to capitalise on increased housing options ahead of the 2025 market.
Transaction volumes are expected to rise further, bolstered by first-time buyers, who accounted for a record 31% of all sales in 2024.
However, the upcoming stamp duty changes in April 2025 could temporarily distort the market as buyers rush to complete purchases before the new rules take effect.
Long-Term Market Outlook
Hamptons anticipates only a minor uptick in transactions due to the stamp duty changes, noting that potential savings for most movers will be modest.
The broader market direction is expected to hinge on affordability, with incomes outpacing inflation for a second consecutive year.
“Many who deferred moving in recent years may finally re-enter the market,” Hamptons noted, signalling a slow but steady recovery in housing demand as the economic landscape stabilises.
