An outlook on the 2025 UK property market

As we head into 2025, we have a cautiously optimistic outlook for the UK property market. This year, the house prices are anticipated to experience some growth, albeit moderate. This will be influenced by factors such as interest rates, government policies and regional trends.

Research from leading UK estate agents show an expected rise in both house prices and property sales in 2025. According to the latest report from the Intermediary Mortgage Lenders Association (IMLA), gross mortgage lending is projected to increase by 16% to £275 billion, up from £237.5 billion in 2024. This growth is attributed to easing affordability pressures and greater demand for remortgaging as rates are expected to settle between 3% and 4%.¹

Property prices

Analysts are widely forecasting an increase in house prices across the UK throughout the year too. According to Rightmove, national asking prices are expected to grow by 4% , while Hampton has predicted a 3% rise across Britain. Notably, the London property market is also expected to outperform other regions for the first time since 2015³.

Mortgage rates and affordability

There is a consensus that mortgage rates are expected to ease in 2025, with average 2-year and 5-year fixed rates settling around 4%². This decline, coupled with wage growth, is likely to boost buyer confidence, particularly for first-time buyers. As affordability pressures ease, the property market is set to benefit from increased activity and a surge in remortgaging⁴.

Rental market

Rental demand is predicted to remain strong, with rental prices expected to grow by around 3% in 2025⁵. Rightmove highlights that rent increases have outpaced wage growth in recent years, placing pressure on tenants. However, there are signs of rent reductions in some segments, reflecting a market striving for stability⁶.

Government policies

Upcoming changes to stamp duty, effective from April 1 2025, are likely to influence buyer behaviour in the property market. The anticipated rush of activity prior to these changes coming in could mirror the surge seen during the temporary NIL band introduction in 2020. Additionally, policies aimed at increasing the housing supply, such as greenbelt development and higher local building targets, could positively impact the market.

Regional variations

While London is expected to lead price growth in 2025, the Northern regions of the UK remain hotspots for investment. Cities like Manchester and Liverpool, bolstered by urban renewal initiatives and thriving rental markets, offer enticing opportunities for both buyers and investors⁷.

What this means for our clients

The UK property market in 2025 is set for steady growth, supported by anticipated declining mortgage rates and government reforms. For clients navigating this evolving landscape, expert guidance and careful planning remain key.

For resident non-domiciled clients, the introduction of the new regime is likely to impact purchasing decisions, which will require attention. Changes to stamp duty may also prompt high-net-worth individuals to secure additional guidance on tax liabilities, including the use of trust structures.

Using our wealth of expertise and network of trusted advisers, we can support you with bespoke lending solutions, ensuring they are seamlessly aligned with your financial objectives.

For more information, please speak with your private banker, or contact our credit specialists by emailing: [email protected]

References:

¹Mortgage market set for a rebound in 2025 | Mortgage Introducer
²Rightmove’s 2025 housing market forecast – Rightmove Press Centre
³UK property will be a buyers’ market in 2025, analysts predict | Housing market | The Guardian
⁴What to expect in the UK property market in 2025 | Mortgage Introducer
⁵UK Property Market Predictions for 2025: What Buyers, Sellers, and Investors Can Expect – North Property Group
⁶What’s in store for the 2025 rental market? | Property news
⁷UK property will be a buyers’ market in 2025, analysts predict | Housing market | The Guardian