Property Market Forecast for 2025
As we reflect on the dynamics of the property market in 2024, the year has been marked by hesitation and uncertainty. We’re calling it ‘the year of procrastination’, in which the election, subsequent budget and high inflation led many potential buyers and sellers to adopt a ‘wait-and-see’ approach. However, as we move into 2025, a clearer path is emerging, paving the way for a more optimistic property market landscape.
A Year of Stabilisation: What to Expect in 2025
In 2024, inflation is expected to return to the Bank of England’s 2% target, accompanied by two anticipated cuts to the base rate. This will improve affordability for buyers, creating a more balanced relationship between interest rates and purchasing power with a finely balanced ratio between supply and demand. The Royal Institution of Chartered Surveyors (RICS) predicts healthy house price growth and a market geared towards sellers. In these times, we generally see more efficient exchange and completions.
2025: A Turning Point for the Property Market
Pent-up demand, suppressed by the uncertainty of 2024, is set to be unleashed in 2025. As home improvement costs continue to rise, more people will opt to move rather than renovate. RICS forecasts a 4% increase in house prices, though regional variations are expected, with the southwest of England projected to see more modest growth at around 2.5%. Falling debt costs will also encourage more mortgaged home movers and first-time buyers to enter the market. This trend is expected to overshadow the presence of investors and second-home buyers, who may take a backseat in 2025’s evolving landscape.
The Homebuilding Agenda: A Boost for New Developments
Homebuilding is set to return to the political spotlight in 2025. With reduced land values and an anticipated easing of planning permissions, we expect a rise in new developments, particularly as we move into 2026. This renewed focus on construction will play a crucial role in addressing housing shortages and meeting increased demand from buyers.
Long-Term Growth: Why 2025 Could Be a Prime Time to Move
House prices are inherently cyclical, and while the growth forecast for 2025 is modest, it is positive. The period from 2026 to 2029 is expected to see significant growth, with RICS forecasting a cumulative increase of over 20%. Buyers in 2025 may reap substantial benefits as house prices are projected to rise steadily in 2026 and 2027, setting the stage for healthy returns on investment.
Key Takeaways for Buyers and Sellers
- Improved Affordability: Interest rate cuts and a more stable inflation will create increased opportunities for buyers, especially first-timers and those seeking to move up the property ladder.
- Healthy Price Growth: A 4% average increase in house prices is forecasted for 2025, with regional variations. The southwest is likely to see more modest growth at 2.5%.
- Increased Demand: Pent-up demand will drive more activity in the market, with fewer investors and more home-movers and first-time buyers stepping in.
- New Developments on the Rise: The homebuilding sector will gain momentum, fueled by favourable policies and reduced land values.
- Strategic Timing: Moving in 2025 could be advantageous, given the anticipated growth trajectory in the following years.
In Conclusion
The property market in 2025 promises a shift from the uncertainty of 2024 to a more balanced and growth-oriented phase. For buyers and sellers, this could mark the perfect time to make a move, as affordability improves, new developments take shape, and long-term house price growth picks up pace. Whether you’re a first-time buyer, a seasoned homeowner, or considering entering the market, 2025’s favourable conditions are worth noting.
For a more detailed update about the property market, feel free to contact me or one of the team.
About DOMVS
DOMVS is an award-winning estate agency with a network of offices providing sales, lettings, holiday lets and land advisory services across the entire Dorset county. With a reputation built on honesty, determination and empathy, DOMVS has been exceeding its clients’ expectations since 2005.
