2025 Property Market Predictions
By Charlie Higgs – Owner Village Properties
What does the new stamp duty deadline mean for buyers? Will Mortgage interest rates fall? Will landlords continue to sell?
Some of the 2025 property market predictions from across the media.
2025 Property Market Predictions for Reading
November and December 2024 were unseasonably busy in Tilehurst and across the Reading area, this end of year activity has provided a good foundation for the start to 2025. As a result, the local market has started the year well, with higher than normal levels of new properties coming to the market and strong buyer demand.
This local trend is mirrored nationally, with the recent stats from Rightmove’s House Price Index stating that the average price of property coming to market has risen by 1.7%, the largest jump in prices at the start of the year since 2020.
With a record number of early-bird sellers coming to market since Boxing Day, giving buyers the highest level of choice at the start of a year since 2015, and 11% ahead of the same start-of-the-year period last year.
The number of buyers contacting agents about properties for sale since Boxing Day is 9% ahead of last year, and the number of sales being agreed over the same period is up by 11%.
Overall, it’s looking like a good start to the year!
Prediction – Our prediction for the local Reading housing market for 2025 is a cautious increase of 4% – 5%.
Mortgage Interest Rates
This is the big one! Mortgages are likely to be the key to the strength of the property market in 2025. Interest rates fell slowly in 2024, dropping from 5.93 to 5.48 per cent for a two-year fixed rate and 5.55 to 5.25 for a five-year deal.
The fall in interest rates ground to a near-halt after the October 30 budget, which the Office for Budget Responsibility said could stoke inflation, leading the Bank of England’s (BoE’s) monetary policy committee to hold its base rate at 4.75 per cent in December.
Hopes of an early cut in rates initially appeared to be dampened by a rise in yields on UK government bonds earlier in January, but the recent fall in inflation has reignited the media’s confidence in a rate cut, this will ultimately be decided by the BoE’s Monetary Policy Committee on the 6 February.
Economists are increasingly confident that rate cuts are on the horizon. A recent survey of 51 economists by The Times predicts at least four rate cuts in 2025, an upgrade from earlier expectations of just two. Such a move could provide a significant boost to the property market, particularly in the southeast, where housing prices tend to be higher.
Prediction – The mortgage interest rate prediction for 2025 is that new rates will average just above 4 per cent by the end of 2025 (with a 25 deposit).
Stamp Duty
From 1st April stamp duty tax will start at a purchase price of £300,000, rather than the current £425,000, for first-time buyers. For those who are not first-time buyers, the threshold will go down to £125,000 from £250,000. Data from the property portal Rightmove suggests that from April 1 only 8 per cent of homes in London will not incur stamp duty for first-time buyers, while 24 per cent of homes in the southeast would be stamp duty-free.
In all probability, unless buyers have already agreed to buy a home and have made significant progress along the often tricky path to completion, there’s little chance of making the 31st March deadline, as the time this process takes is generally 4-6 months if not longer, and there is sure to be a very big bottleneck as we approach the deadline.
Robert Gardner, the chief economist at Nationwide, said the spring deadline this year was “likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax”. However, buyers may discover that a stamp duty holiday is a con. These periods of tax discounts almost always drive property prices up so that, in the past, many bargain-hunters have ended up paying more for properties than any relative saving made on stamp duty.
Ray Boulger from the mortgage broker John Charcol said on a typical £500,000 property, the extra stamp duty would make up only 0.5 per cent of the purchase price and so even a small decline in prices after April 1 would make rushing to beat the March 31 deadline a false economy.
First Time Buyers
One of the government’s aims in 2025 is to free up building land for first-time buyers, who make up 49 per cent of all purchasers nationally, one of the highest proportions ever, and in some areas, like Manchester (75 per cent) and Slough (73 per cent).
First-time buyers cashing in on landlord sales will be a big story in 2025. A recent report confirmed that in 2024, the proportion of properties sold by landlords which were bought by first-time buyers was at its highest level, 35 per cent, up from 16 per cent in 2016.
First-timers also benefited from an unprecedented wealth transfer from their parents, a trend that is certain to continue in 2025. Gifts and loans from the Bank of Mum and Dad totalled £9.3 billion in 2024.
Prediction – The prediction for 2025 is that The Bank of Mum and Dad will hand a record £10bn to their kids this year.
The Rental Market
Prospective landlords are facing challenges due to rising mortgage rates and higher stamp duty costs. Zoopla has reported that many landlords are choosing to sell their properties, particularly in higher-value areas of London. In the WC postcodes, 32% of homes for sale have been rented out within the past four years, significantly higher than the national average of 12%.
This trend of landlords selling, especially in more affluent London areas, is expected to continue into 2025.
The controversial Renters’ Rights Bill is likely to come into law this year, with the promised ban on “no-fault” evictions and landlords being forced to improve the energy efficiency of rental homes. The downside, if National Residential Landlords Association predictions are accurate, is that the tax clampdowns will result in a shortage of rental properties as landlords sell up.
Rightmove reported in December that each available rental property was attracting 11 inquiries, compared with six in 2019. However, more positively, rental costs on newly let properties in Britain rose by 2.6 per cent over the year to November, the lowest annual increase since November 2020 (2.4 per cent).
Prediction – The prediction on rent increases for 2025 is 3.7 per cent across the UK, although that is reduced to 1.5 per cent in London, where tenants have already absorbed huge increases.
Recently Listed Homes by Village Properties
Here are just a few of the properties recently listed for sale from our Tilehurst Office –
House for Sale in Reading – Guide Price £850,000
House for Sale in Reading – Guide Price £475,000
House for Sale in Reading – Guide Price £450,000
House for Sale in Reading – Guide Price £450,000
To see the very latest homes coming to the market, click ‘New to market homes’, this lists all of the very latest homes as they come to the market.
Or see our ‘Recently Sold Properties’.
Considering a move in 2025?
If you are thinking of buying or selling a home in Tilehurst or the surrounding areas of Reading, please feel free to call me for an informal chat, I’ll be pleased to help you if I can.
You can also book a Face to Face Valuation, or use our Instant Online Valuation tool.
Thank you for reading
Charlie Higgs – Village Properties Tilehurst & Twyford
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