Property Market Update: January 2025

Welcome to the January edition of the Property Market Update! We've collated information from experts across the UK to provide you with a comprehensive view of how the market ended 2024.

December's figures paint an encouraging picture of how the property market performed in the final month of 2024, with most major indices reporting positive year-end growth.

Nationwide reports that UK house prices closed out 2024 up +4.7% compared to December 2023, with a modest month-on-month increase of +0.7% after seasonal adjustments.

Halifax's data tells a slightly different story, with their average house price settling at £297,166, showing a minor monthly decline of -0.2% but maintaining healthy annual growth of +3.3%.

A strong end to 2024

The sales market demonstrated remarkable resilience throughout December, with Zoopla reporting the largest pipeline of sales progressing to completion in four years.

As we enter 2025, there are 283,000 sales worth £104 billion moving through the system, representing a substantial +30% increase compared to the same time last year.

Regional variations continued to shape the market landscape in December, with northern regions outperforming their southern counterparts. Northern Ireland maintained its position as the best-performing area for the second consecutive year, whilst East Anglia experienced more challenging conditions.

Mortgage market and buyer activity

December's mortgage rates from Moneyfacts showed two-year fixed deals at 5.46% and five-year fixes at 5.23%. Whilst these rates remain notably higher than the 1.5% seen in 2021, they've stabilised somewhat, with typical rates for those with a 25% deposit hovering around 4.5%.

Despite these higher borrowing costs, December's buyer activity showed promising signs. Rightmove reports a 13% increase in new buyer demand, whilst RICS data indicates new buyer enquiries are up with a net reading of +12%.

However, buyers were displaying increased price sensitivity, particularly following the recent budget, with many securing properties below asking price in the fourth quarter of 2024.

Seller confidence and asking prices

December saw continued growth in seller activity, with new instructions rising to +17% from +14% according to the Royal Institute of Chartered Surveyors (RICS).

However, Rightmove notes that new seller asking prices dropped by a seasonal 1.7% (-£6,395) to £360,197, though prices still ended the year +1.4% above December 2023. Interestingly, first-time buyer homes in the North East bucked this trend, showing a 1% increase in December.

Looking ahead to 2025

As we move into the new year, the outlook appears cautiously optimistic, though with some potential challenges ahead. Rightmove forecasts a +4% rise in new seller asking prices over 2025, whilst Zoopla predicts a continued recovery in sales volumes, reaching 1.15m with modest house price inflation of 2.5%.

However, upcoming Stamp Duty changes could create market volatility, particularly in the first quarter of 2025. Robert Gardner, Chief Economist at Nationwide, suggests we might see a surge in transactions before the changes take effect, followed by a potential slowdown.

Summary

December's figures provide an encouraging bookend to 2024, with the property market showing remarkable resilience despite the challenging economic backdrop.

Whilst regional disparities persist and buyers remain price-conscious, the strong sales pipeline and increasing buyer demand suggest we're entering 2025 on solid footing. The key challenge for the months ahead will be navigating the anticipated Stamp Duty changes whilst maintaining this momentum.