2025 housing market forecast: 5 things you need to know

Thinking 2025 could be the year you make your move? Then you're likely wondering what the next 12 months could hold for the housing market. Take a look at the key predictions from our in-house experts, to make sure you start your moving journey as prepared as possible.

1. 2025 will still be a buyers' market

We talked about 2024 being a buyers' market, and next year is set to be no different. Things like an improved choice of homes for sale and longer average time to sell means home-buyers will continue to have the upper hand when it comes to agreeing a sale.

But what could happen to house prices? Well, our experts predict that average asking prices will increase by 4% by the end of next year, which, even though the largest growth we've predicted since 2021, is in-line with the long-term average. For context, the pandemic years of 2020 to 2022 saw extraordinary price growth, driven by lots more people looking to move than there were homes for sale.

We expect around 1.15 million completions to happen in 2025, which is an increase on recent years. This activity reflects improving market conditions, but sellers will still need to price competitively in order to find a buyer.

2. Mortgage rates look set to fall, but not to historic lows

Five-year and two-year fixed rates could drop to around 4.0% in 2025, down from the current 4.83% (5-year fixed) and 5.08% (2-year fixed) averages*.

This reduction in average mortgage rates is tied to predictions of four Bank of England base rate cuts in 2025. But as always, external factors like geopolitical events and inflation could still change the future direction of rates.

For those deciding between fixed-rate options, two-year deals may become increasingly attractive as their costs align more closely with five-year rates. This trend reflects shifting preferences, with shorter terms potentially offering better flexibility.

While lower rates are likely to boost buyer confidence and affordability, we won't see a return to ultra-low mortgage rates.

*Rates from 10th December 2024. These rates are provided by Podium and are an average based on 95% of the mortgage market. All rates are based on products with a circa £999 fee.

3. Stamp duty changes impacting buyer activity

From April 1, stamp duty rates are set to rise, which could mean increased buying costs for some home-movers. Our data has shown a rush among some buyers aiming to complete their purchases before the deadline. The number of first-time buyers that are active in the market and sending enquiries to agents is 13% ahead of the same period last year.

The availability of stamp duty-free homes for first-time buyers varies by region. While only 8% of London homes will qualify, over 70% of properties in the North East fall within the new £300,000 threshold.

Our property expert, Tim Bannister, says: "Stamp duty charges rising from 1stApril means we are likely to see a particularly busy first three months of the year as first-time buyers, home-movers and investors all try to complete on planned purchases and avoid higher charges. The effects of stamp duty rising will be felt for the rest of the year too, and we may see some negotiation tactics play out, particularly on properties close to the £300,000 mark, as both buyers and sellers try to mitigate their higher costs through the price agreed."

4. Remortgaging will be a big focus for mortgage lenders

If you're nearing the end of a fixed-rate mortgage deal, remortgaging will likely be on your radar in 2025. Many homeowners who secured five-year fixes during the pandemic, or two-year fixes after the mini budget will face the decision about their next mortgage as their deals come to an end.

Here's what this could mean if your mortgage deal ends in 2025:

• If you locked in a five-year fixed rate during 2020, when fixed rates were much lower on average, you may see higher costs when you remortgage

• If you secured a two-year fixed deal at higher rates in 2022 or 2023, you could benefit from lower monthly repayments as rates decline

To help homeowners keep track of what's happening with remortgage rates, we've launched a remortgage rate tracker. This can help you monitor trends, and explore your options when the time comes to lock in a new mortgage deal.

Our mortgage expert, Matt Smith, says: "It's likely to be a mixed year for the market. Those who took out peak-mortgage rate two-year fixes after the mini-Budget will see their deal come to an end and will likely find themselves with lower costs next year. By contrast, many movers will be rolling off a low five-year fixed rate agreed during the busy market of 2020 and will see costs rise. With remortgaging and product transfers set to be an important theme for lenders next year, we've launched a remortgage rate tracker to show the latest trends in this sector and monitor lender behaviour next year."

5. Expect a London resurgence

In terms of price growth, London has lagged behind the rest of the UK in recent years. The average asking price for homes in the capital has risen by 12% over the past five years, compared to 21% nationally.

But factors like the return of a five-day office-based working week for some companies, and renewed interest from international buyers, are expected to drive up demand in the capital. Our experts expect London price growth to be in-line with, or maybe even marginally ahead of, national price rises in 2025.

Remember, you can get an instant estimate of the value of your home by using our Instant Valuationtool, along with monthly price-change updates.

The header image for this article was provided courtesy of Sefftons, Norfolk

READ MORE: Our 2025 house price forecast

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