1. House Prices: A Gradual Stabilisation

After a period of volatility, house prices are expected to stabilise in 2025. While prices have dipped in some areas due to affordability pressures, the overall market is showing signs of resilience. Factors such as wage growth and easing inflation could help support prices, but regional variations will persist.

2. Mortgage Rates: A Slow Decline

Mortgage rates have risen sharply in response to higher interest rates, but they are expected to gradually decline in 2025 as inflation eases and the Bank of England potentially cuts rates. This could improve affordability for buyers and stimulate market activity.

3. Affordability Challenges

Affordability remains a key issue, particularly for first-time buyers. High house prices and mortgage costs have pushed homeownership out of reach for many. However, government schemes and lender innovations may help bridge the gap for some buyers.

4. Rental Market Pressures

The rental market continues to face significant strain, with demand far outstripping supply. Rising rents and a lack of available properties are making it increasingly difficult for tenants. Legislative changes aimed at improving tenant rights could further impact landlords, potentially reducing the supply of rental homes.

5. Regional Variations

The housing market remains highly regional. Areas with strong local economies and good transport links are likely to outperform others. Northern regions, for example, may see more growth compared to the South, where prices are already high.

6. Sustainability and Energy Efficiency

Energy efficiency is becoming a growing priority for buyers and renters alike. Properties with higher EPC ratings are likely to be more attractive, and government incentives for green improvements could play a role in shaping the market.

7. Political and Economic Uncertainty

The housing market remains sensitive to broader economic and political developments. A general election in 2024 could bring policy changes that impact the market, while global economic trends will also play a role.

Conclusion

While challenges remain, the UK housing market is showing signs of stabilisation as we move into 2025. Affordability improvements, declining mortgage rates, and regional growth opportunities could help drive activity. However, the rental market’s pressures and broader economic uncertainty mean that the market will remain complex and dynamic.