The UK housing market has entered 2025 in a strong position, with high levels of choice and a strong sales pipeline.
With rising buyer confidence, the sector offers opportunities for estate agents, albeit with challenges in pricing and affordability.
Despite economic pressures, the housing market demonstrated remarkable resilience in 2024, with house prices rising 4.7% year-on-year to an average of £269,426 in December, the strongest growth since late 2022.
The regions saw divergent trends, with more affordable areas like Northern Ireland (+7.1%) and the North (+5.9%) outperforming pricier locations such as London (+2%) and the South East (+2.3%).
REALISTIC PRICING IS ESSENTIAL
Rightmove predicts new seller asking prices will rise by 4% in 2025, but while the market is strong, realistic pricing is essential. Properties that are priced correctly continue to attract buyer interest, even in challenging economic conditions.
The prime markets of England and Wales faced headwinds, with average prices dipping 6.8% year-on-year to £1,173,152. Buyers in these higher-value markets remain cautious due to economic uncertainty.
In my opinion there are a number of aspects at play that are having an impact on the prime sector, such as the new stamp duty surcharge, changes to non-dom status and the higher interest rate environment. Agents operating in these segments must emphasise the unique value propositions of their listings to maintain momentum.
ECONOMIC OUTLOOK
Inflation, while it did cool, remains above the Bank of England’s 2% target, ending 2024 at 2.6%. Interest rates held steady at 4.75% in December, but economists predict cuts are on the horizon for 2025, potentially easing mortgage rates and stimulating buyer activity.
Mortgage rates also remained elevated for longer than expected in 2024. The average 2-year fixed rate mortgage is currently at 5.48%, only slightly lower than 5.93% a year ago.
Meanwhile, 5-year fixed rate deals have only crept down too, from 5.55% to 5.25%.
With mortgage rates slightly elevated, buyers remain cautious, and pricing correctly remains key.
Almost one million property price reductions were recorded throughout 2024, the largest number on record. According to TwentyEA, this number is 8.1% higher than in 2023 and 17.6% higher than in 2019.
Affordability also remains a key concern. Estate agents must work closely with clients to ensure properties are marketed effectively in this environment. For buyers, clarity on financing options is essential to build confidence and drive decisions.
RISING BUYER DEMAND
The sales pipeline has strengthened significantly, with 283,000 transactions worth £104 billion progressing into the first half of 2025. Mortgage approvals in November 2024 were also up 31% year-on-year and new buyer demand rose by 13%, according to Rightmove.
This is an encouraging sign for agents. The increase in homes available for sale has improved choice, and with buyer confidence recovering, we’re seeing more transactions being agreed. The next challenge will be ensuring these sales move smoothly to completion.
The housing market’s recovery is further bolstered by a boost in activity ahead of the stamp duty deadline in late 2024, with sales agreed up 22% year-on-year.
NEW OPPORTUNITIES
For estate agents, the 2025 market presents opportunities to build on the recovery of 2024 while addressing challenges in pricing, affordability, and client expectations.
Agents have a pivotal role to play in guiding clients through this complex landscape. Whether it’s navigating mortgage constraints, ensuring realistic valuations, or highlighting the benefits of specific properties, estate agents’ expertise will be critical in maintaining the market’s momentum.
As the market enters a new year, staying informed, agile, and client-focused will be key for estate agents looking to thrive in a resilient yet evolving housing sector.
Jonathan Handford is Interim Managing Director of Fine & Country
