British Real Estate: Positive Outlook for Property Market in 2025
British real estate is anticipating a prosperous 2025, with fresh data showing strong growth in house prices nationwide. The latest report from property platform Rightmove reveals a remarkable 1.7% rise in house prices during January, signalling a strong start to the year. The surge indicates the average property has gained £5,992 in value, pushing the national average asking price to £366,189. This rise marks the largest monthly increase in house prices since 2020, underlining the positive sentiment in the sector.
The report also highlights an increase in seller activity, which suggests that confidence in the property market is on the rise. Rightmove has revealed that 11% more homes are being listed for sale compared to the same period last year. Additionally, the average number of properties held by estate agents is at a ten-year high for January, which signals a busy year ahead for property transactions.
For prospective buyers and property investors, this market dynamic translates to more options than in 2024. With more properties coming to market, buyers will enjoy greater choice and can afford to be more selective. This could lead to better quality homes becoming available. Well-presented, high-quality builds would stand out as desirable options.
Regional Variation: The North Leads in Price Growth
While the UK property market is on an upward trajectory overall, the regional variations continue to be significant. The northern regions have outperformed the south in house price growth for several months. January’s Rightmove data shows British real estate trends remain steady.
The North East of England has seen the most substantial annual growth in house prices, with values rising by 6.2% over the past year. Month-on-month, the North East experienced a 2.5% increase, which is notably above the national average. Other northern regions, such as Yorkshire and the Humber, followed suit, with house prices rising by 3.8% annually. Similarly, the North West saw a robust 2.9% annual increase, further cementing the trend of stronger price growth in the north.
These regions continue to offer some of the most affordable properties in the UK, making them an attractive proposition for first-time buyers and investors alike. The lower price points combined with significant growth potential make the north an appealing area to invest in, particularly for those with more modest budgets.
The Impact of Interest Rates on the Property Market
One of the most significant factors influencing the property market at the start of 2025 is mortgage interest rates. Interest rates are a primary driver of uncertainty for buyers and sellers. Their trajectory will profoundly impact house prices and property investment.
In the context of rising inflation, the Bank of England’s base rate has been a key concern. Recent data shows UK inflation has eased to 2.5%. This has led to expectations that the Bank of England may lower its base rate. Currently standing at 4.75%, any reduction in this rate would likely have a knock-on effect on mortgage interest rates, which have been high in recent months.
Recent figures from Moneyfacts reveal a slight decrease in average fixed-rate mortgages between December and January. The typical two-year fixed-rate mortgage now stands at 5.48%, while the average five-year deal sits at 5.25%. This narrowing gap is the smallest difference seen in three years. It could influence potential buyers’ financing decisions.
Property expert Colleen Babcock from Rightmove commented on the outlook, stating: “Rightmove’s early-year snapshot shows a promising start to 2025. However, the market requires further support in the form of consistent Bank Rate cuts, which should help ease mortgage rates. Additionally, more help for first-time buyers, particularly in higher-cost areas, would be beneficial.”
A reduction in mortgage rates in 2025 would likely improve property affordability. This could help sustain house price growth.
Hopes for a Better Year Than 2024: British Real Estate
As the property market begins the new year, industry professionals are cautiously optimistic. Jordan Halstead, CEO of Jordan & Halstead Estate Agents in Chester, expressed his confidence in the market’s potential for 2025. He pointed out that the estate agency has seen a larger pipeline of sales than at the start of 2024, which bodes well for the upcoming months. Halstead mentioned that the early months of the year were likely to be strong for exchanges and completions, with activity picking up again after the winter lull.
He also observed a shift in seller expectations, with many now more willing to heed the agency’s valuation recommendations. This indicates that sellers are becoming more realistic about market conditions and acknowledging that mortgage costs are higher than they were in previous years. This shift could help to stabilise the market, as sellers are better aligned with current trends.
Despite the optimism, Halstead acknowledged that lending remains challenging due to the ongoing uncertainty surrounding interest rates. Many buyers are holding off, hoping for a better deal on mortgage rates in the near future. While there is hope that rates will drop, the unpredictability of the market continues to pose challenges. However, Halstead remains hopeful that 2025 will be an improvement on 2024, provided that the government and the Bank of England maintain a consistent and supportive approach.
A More Balanced Market for Buyers and Sellers
As the UK property market continues to evolve in 2025, one of the most notable developments is the more balanced relationship between supply and demand. With an increasing number of properties coming onto the market, prospective buyers now have more choices than they did in 2024. This balance could enable buyers to be more discerning. They may opt for homes with better presentation or higher construction standards.
For sellers, this shift means that they may need to work harder to ensure their property stands out in a competitive market. Presentation and quality will become more significant in achieving a sale. Properties with superior finishes and modern amenities will attract more attention.
Looking Ahead: The Importance of Government Support
Despite the promising signs of growth in the property sector, it is clear that government intervention will play a crucial role in sustaining this positive momentum. The ongoing challenge of high mortgage rates, combined with the rising cost of living, means that many first-time buyers are struggling to enter the property market. As Colleen Babcock from Rightmove mentioned, additional support for buyers could help level the playing field. This would enable more individuals, especially in high-priced areas, to make home purchases.
Government schemes, such as Help to Buy or shared ownership, aim to support first-time buyers. They could provide a much-needed boost for those entering the market. Additionally, easing mortgage lending criteria and offering favourable borrowing terms could encourage buyers and sellers to engage. This would lead to more active participation in the market.
In the long term, continued economic stability and lower interest rates would foster a favourable environment for the property market to thrive. While challenges remain, the outlook for 2025 is positive. Consistent support from the government and Bank of England can help.
Conclusion: British Real Estate
As we move through the early months of 2025, the UK property market shows significant promise. With house prices continuing to rise at a healthy pace, increased activity from sellers, and a more balanced market for buyers, there is reason for optimism. The northern regions of England continue to outperform the south, with some of the most substantial price increases seen in the North East and North West.
However, the ongoing uncertainty surrounding mortgage interest rates remains a key factor influencing market trends. As inflation eases and expectations of rate cuts grow, mortgage rates are expected to decrease. This would improve affordability and support house price growth.
For prospective buyers, sellers, and investors, 2025 presents an exciting opportunity to engage with the property market. By staying informed about the latest trends and developments, individuals can make more informed decisions and take advantage of the positive momentum in the sector.
If you want to capitalise on British real estate trends, now is an excellent time to explore investment opportunities. You can also discover projects that align with your goals.