The housing market is often used as a benchmark when assessing the economy in the UK. When the housing market is down, people are generally considered to have less access to money and loans, slowing down the usual flow and steady growth of the market.
Over the last couple of years, the UK housing market has slowly been recovering from Liz Truss’ calamitous mini-budget in September 2022. Now, the predictions of the housing market in 2025 have come in, and by all accounts, it’s going to be a positive year.
Optimism for House Prices
From late 2022 through 2023, the UK housing market wasn’t in a good place. The surges in borrowing costs, in particular, have been cited as a major repellent to people who’d previously considered partaking in the market. The third Conservative prime minister of the last six years, to the point of the mini-budget, lost her job in 50 days as a result.
The following year, 2024, was expected to show much of the same. It’d either be flat or even falling prices throughout the year or, perhaps, small gains. Rent went up and so did mortgage rates, making the market increasingly inaccessible, and yet, the year in review is expected to show growth.
Where 2023 clocked around a 1.4 per cent loss on the average house price in the UK, 2024 is expected to have seen around a 3.0 per cent increase. If this assumption proves to be true, it would be the first big step in the right direction for further growth and better conditions for everyone involved.
Interest rates are expected to continue to lower, even if at a slower pace than hoped and expected. In kind, rent is expected to come down, contributing to another year of around three per cent growth before we see an uptick to over five per cent as 2026 progresses.
Homes Sold on the Rise
House prices being able to go up, naturally, indicates enough competition in the market and enough people who can afford a more expensive property. Towards the end of 2024, there was another strong indicator of the market’s health: an increase in the number of housing transactions.
October 2024’s count of 100,410 transactions marked a hefty 21 per cent increase on October 2023. October 2022 marked the last peak with around 4,000 more transactions than noted in October 2024. It’s a good sign of activity levels returning to the housing market and people being able to afford to buy.
An element that will be helping to propel these transactions will be the additional avenues to sale. Over the last few years, websites with the headline “we buy any house” have become more prominent. They make an offer, assess the house and value it, take stock, survey, and then exchange with the seller, sending cash quickly.
The option caters to a growing demographic of people who want to sell their homes quickly and without the hassle of taking on the housing market. They don’t need to wait for offers, prime selling months, or an estate agent to be more active to try to sell the property, making it easier to add another property to the count of houses sold.
Coming into 2025, predictions for one of the UK economy’s primary indicators are positive, with house price growth tipped to hold steady and, perhaps, lead to even greater growth in 2026.
Also Read: Navigating Market Volatility in UK Property Lettings
