As we move further into 2025, the UK property market is beginning the year with strong foundations, and the outlook remains positive. Activity levels are expected to improve as the year progresses, and price growth forecasts for 2025 (3.1%) and 2026 (3.7%) are in line with the growth seen in 2024.
Following a period of weaker market conditions from late 2022 to early 2024, mortgage approval and transaction rates have returned to more normal levels. Recent interest rate cuts have also boosted market sentiment, providing a renewed sense of optimism. That said, with persistent inflation above target, interest rate reductions by the Bank of England are expected to remain slow and measured.
Looking ahead, longer-term mortgage rates are anticipated to stabilise around 4%, with the current 5-year swap rate at 4.0%. In terms of price growth, affordability will play a key role—especially in pricier regions like the South East and London, where price sensitivity will continue to be a factor for the foreseeable future.
However, one of the biggest opportunities for the sector in 2025 lies in the new build market. With the government taking active steps towards meeting its house-building targets, this could provide a significant boost to housing supply and create new opportunities for both buyers and investors.
While challenges remain, there’s no doubt that 2025 has strong potential for growth, and the outlook for the UK property market is heading in the right direction.
