UK housing market poised for growth: A bright horizon for 2025

As the year 2024 nears its end, there is growing positivity in the UK housing market, supported by a better-than-expected economic performance and encouraging prospects for the upcoming year. The UK economy has shown strength, with GDP growth returning from the decline observed in late 2023. Due to lower interest rates, an increase in house prices, and rising rents, both homebuyers and investors are entering 2025 with a renewed sense of optimism.

Market stability amid pre-budget fluctuations

During November, the average asking price for new sellers experienced a larger than usual decrease, with a 1.4% drop (equivalent to -£5,366), surpassing the typical seasonal dip. However, Rightmove’s most upbeat prediction anticipates a 4% rise in house prices by 2025.

Even with the current temporary decrease, sales activity continues to be strong with agreements increasing by 26% compared to the same time last year. Furthermore, there has been a 6% increase in seller listings compared to the previous year, which can be attributed to the initial indications of growing buyer interest after the interest rate cuts.

In a market where competition among sellers is at its peak in 10 years, it is important to have well-presented and reasonably priced properties in order to achieve fast sales.

Inflation decreases, boosting the outlook for economic growth

The consumer price inflation in the UK for October exceeded the Bank of England’s (BoE) target of 2%, reaching 2.3%. Despite being higher than the 1.7% in September, the CPI is still only half of what it was last year at 4.6%. In addition, the British pound increased by nearly one-third of a cent against the US dollar before giving back most of those gains due to the slower rate cuts and decrease in bond prices.

Strong property sales pipeline and increase in first-time buyers

The IMF has raised its forecast for the economic growth of the UK in 2024 from 0.7% to 1.1%. This adjustment corresponds with a noteworthy rise in property market activity, which has now exceeded the highest level observed in 2020. According to Zoopla, the current property sales pipeline is worth £113 billion, representing a significant increase of 30% from the previous year.

The recent reductions in interest rates in August and November have added more excitement to the market. This has led to first-time buyers (FTBs) becoming the biggest group, representing 36% of all sales in 2024. Despite the decision not to extend the current stamp duty relief thresholds in the budget, the majority of homebuyers are still determined to proceed with their plans, with 73% remaining committed.

Also, a recent survey showed that just 5% of participants plan to postpone their property purchases indefinitely. Our research reveals an interesting finding on November 29, ‘Buy Nothing Day,’ there were 342% more property sales completed compared to the rest of the month. This reflects the strong momentum of the market despite broader economic uncertainties.

Landlords stay positive as CGT rates remain unchanged

Landlords across the country were relieved when the expected increase in capital gains tax did not happen. As per a recent survey, the majority of landlords, 84%, plan to keep their current property portfolios, and an extra 4% are looking to grow their portfolios. At the same time, only 12% are contemplating selling off their investments.

Spotlight on Singapore

Our Singapore team presented a new phase at Berkeley’s London Dock in Zone 1 in Singapore and also conducted a seminar on the impact of the Autumn Budget on property investment. Moreover, the impressive Nikki Beach Residences in Ras AL Khaimah also caught the eye, presenting promising opportunities associated with the UAE’s inaugural legal casino to be developed by Wynn Resorts, scheduled for 2027.

The property maker’s ability to withstand challenges, along with a favourable economic forecast, creates a promising outlook for 2025. Whether buying, renting, or investing, the upcoming year holds promising opportunities.