Rightmove experts outline five key predictions for the year ahead
The UK housing market is set for a shift in 2025, with rising property transactions, moderating mortgage rates, and a resurgence in London’s price growth. Property portal Rightmove has outlined five key predictions for the year ahead, offering insights into the home-selling and mortgage markets.
Transactions to rise, buyers will have plenty of choices
Rightmove expects the national average asking price to increase by 4% in 2025, aligning with long-term price growth trends. The rise marks the largest price growth prediction from the firm since 2021, though it is modest compared to the pandemic-era spikes seen between 2020 and 2022.
The supply-demand balance continues to favour buyers, with the average number of homes per estate agent branch at its highest level for this time of year in a decade. This increased availability is providing buyers with more options, even as demand remains robust.
In total, Rightmove predicts around 1.15 million property transactions in 2025, supported by the abundant supply of homes for sale. Strong competition among sellers is expected to limit higher price growth while driving more sales.
London market set to rebound
London’s property market is expected to see a turnaround in 2025, following years of subdued price growth. The capital’s average asking price is up 12% compared to five years ago, lagging behind the 21% increase across Great Britain.
Rightmove expects London’s price growth to match or slightly outpace the national average next year. The return of workers to offices, coupled with increased interest from international buyers, is predicted to underpin the market recovery.
Mortgage rates to ease, but uncertainty remains
Mortgage rates are likely to decline further in 2025, with Rightmove forecasting average two- and five-year fixed rates to hover around 4% by year-end, down from their current levels of 5.08% and 4.83%, respectively.
Lower rates are expected to improve affordability and boost confidence, though geopolitical tensions and inflation pose uncertainties. The narrowing gap between two- and five-year fixed rates could make shorter-term products more attractive, potentially reversing recent trends in borrower preferences.
First-time buyers to stay active
The upcoming stamp duty changes, set to take effect on April 1, 2025, are spurring activity among first-time buyers. The reduction in the tax-free threshold for first-time buyers and home-movers in England could add thousands to moving costs.
Rightmove data shows a rush to complete purchases before the deadline, particularly in higher-priced areas. However, many homes in England still fall under the £300,000 threshold, meaning first-time buyers will continue to benefit from lower tax rates compared to second-home buyers and those trading up.
Despite the looming deadline, affordability improvements and rising rents are likely to keep first-time buyers active throughout the year. Enquiries from this group are already 13% higher than at the same time in 2024, according to Rightmove.
Remortgaging set to dominate lenders’ agendas
Remortgaging is poised to be a key focus for lenders in 2025, as many fixed rate deals taken out during the pandemic come to an end. Borrowers who locked in low rates during 2020 may face significantly higher costs when renewing their deals.
For example, a homeowner who took out a five-year fixed rate at 2.55% in 2020 could now face an average rate of 4.89% when remortgaging for the same term. Borrowers rolling off two-year fixed rates secured at the peak of the mini budget turmoil in 2023 may find their new rates slightly lower.
“We expect a busier year in 2025, with around 1.15 million transactions completed,” said Tim Bannister (pictured left), property expert at Rightmove. “Stamp duty charges rising from April 1 means we are likely to see a particularly busy first three months of the year as first-time buyers, home-movers and investors all try to complete on planned purchases and avoid higher charges.
“The effects of stamp duty rising will be felt for the rest of the year too, and we may see some negotiation tactics play out, particularly on properties close to the £300,000 mark, as both buyers and sellers try to mitigate their higher costs through the price agreed.”
For Matt Smith, mortgage expert at Rightmove, 2025 will likely be a mixed year for the market.
“Those who took out peak-mortgage rate two-year fixes after the mini budget will see their deal come to an end and will likely find themselves with lower costs next year,” he pointed out. “Combined with wage growth, they may feel some significant affordability improvements.
“By contrast, many movers will be rolling off a relatively low five-year fixed rate agreed during the busy market of 2020 and will see costs rise. With remortgaging and product transfers set to be an important theme for lenders next year, we’ve launched a remortgage rate tracker to show the latest trends in this sector and monitor lender behaviour next year.”
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