UK housing market 2024-25: Recovery and opportunities

The UK housing market has shown resilience as it transitions from a challenging phase of higher borrowing costs to growth and stability. With house price inflation rebounding to 1.5% year-on-year in October 2024 and predictions of 2.5% growth in 2025, the stage is set for a dynamic year ahead in real estate. At LondonDom, we are closely monitoring these trends and aligning our strategies to support our clients in navigating this evolving landscape.

Zoopla's latest House Price Index highlights several pivotal factors driving the market recovery. Stronger incomes and lower mortgage rates have played a significant role, with household incomes increasing by 15% since mid-2022. This has helped restore housing affordability without drastic price corrections. Meanwhile, mortgage rates have stabilized at around 4.25% for a 5-year fixed loan, offering buyers greater financial predictability. London, despite modest gains of 1.1%, remains a high-value market requiring careful consideration of affordability and buyer preferences. Increased sales activity is also driving growth, with transactions projected to rise by 5% in 2025, reaching 1.15 million completions. This growth is underpinned by a diverse range of buyer motivations, from first-time purchases to needs-driven relocations.

As a boutique real estate consultancy with two decades of experience, LondonDom brings a unique lens to these market developments. Despite slower recovery in price inflation, London remains a global hub for property investments. Current undervaluation in certain segments presents an opportunity for savvy buyers to secure prime assets before prices rise further. The anticipated increase in stamp duty costs from April 2025 could act as a drag on price growth, particularly in the mid-market range. LondonDom recommends buyers and sellers finalise transactions early in the year to avoid additional financial burdens. First-time buyers, who continue to make fewer compromises on property prices and leverage slightly larger mortgages, will underpin market activity. Understanding the needs of this demographic will be crucial for sellers aiming to achieve optimal results. Regional hotspots such as Manchester, Belfast, and Glasgow offer compelling growth potential for investors, while London's prime locations remain a safe haven for long-term value.

At LondonDom, we are optimistic about the opportunities that 2025 presents for buyers and sellers alike. We expect a competitive but stable market, with rising incomes and innovative lending practices supporting transactions. However, success in this market will depend on informed decision-making and a strategic approach to timing and location. If you're considering buying, selling, or investing in property, our team at LondonDom is here to provide expert guidance tailored to your unique needs. Let us help you navigate the complexities of the UK housing market with confidence.