UK Residential Research Update: January 2025
As we enter 2025, the UK housing market exhibits notable trends in house prices, rental rates, and market activity. This update provides an overview of the latest data and insights to help homeowners, buyers, and investors navigate the current landscape.
House Price Growth
In November 2024, the UK experienced a 3.3% annual increase in average house prices, bringing the typical property value to £290,000. This marks a rise from the 3.0% growth observed in October 2024 and a significant recovery from the negative 2.7% recorded in December 2023.
Regionally, the North of England and Scotland have outpaced Southern England in price appreciation, reflecting a persistent North-South divide. Analysts predict an average house price increase of 2.5% for 2025, with regional disparities expected to continue.
Rental Market Dynamics
The rental sector has seen significant activity, with average UK private rents rising by 9.0% in the 12 months leading up to December 2024. This is a slight decrease from the 9.1% increase noted in November 2024 and below the peak annual rise of 9.2% recorded in March 2024.
London continues to lead in rental growth, with a notable 11.5% increase, indicating sustained demand for rental properties in the capital.
Mortgage Market and Interest Rates
Despite fluctuations in the money markets, major UK banks have maintained competitive mortgage rates, opting to absorb increased funding costs rather than passing them on to consumers. This strategy aims to sustain lending volumes and market share amid a dynamic economic environment.
Additionally, there is an anticipation of potential interest rate cuts by the Bank of England in 2025, following recent declines in inflation. Such adjustments could further influence borrowing costs and housing market activity.
Market Outlook
The UK housing market is expected to remain active in 2025, with forecasts indicating a 3% rise in house prices across Britain, followed by 3.5% in 2026 and 2.5% in 2027. This growth trajectory suggests a stable yet competitive environment for both buyers and sellers.
Conclusion
As 2025 unfolds, the UK residential property market demonstrates resilience and adaptability. Stakeholders should stay informed about regional variations, mortgage rate trends, and evolving market dynamics to make well-informed decisions in this ever-changing landscape.