2024 was a pretty quiet year for the property market and while mortgage rates dropped, it wasn’t as substantial as many people hoped. This meant that there wasn’t quite the housing boom some experts predicted and house prices remained stagnant, relatively speaking.
In this article, we’ll explore some of the biggest predictions for house prices and mortgages in 2025 and how they might affect you.
1. House Prices On The Rise
On average, house prices increased by 1% to 4% in 2024, with experts predicting this to be more like 3% to 4% in 2025. This is exciting for buyers but less so for sellers who will likely pay more to move home or buy their first property.
Stamp Duty relief coming to an end from April 1st could scupper these predictions, however, keeping prices lower for the foreseeable future.
2. Are Mortgages Set To Fall?
Mortgage rates fell in 2024 and at the end of the year, the average fixed-rate mortgage had dropped from 5.93% to 5.62%. The Base Rate is currently 4.75% in the UK which could go as low as 4% by the end of the year, which could see two-year fixed rate deals fall to closer to 3.5%, on average.
This means that while house prices could increase, mortgages will become cheaper, which is a silver lining for buyers.
3. A Mixed Bag For First-Time Buyers
Affordability is still an issue in 2025, particularly for first-time buyers looking to buy a home with smaller deposits. This will likely remain the case in the next year or so, with the cheapest 90% two-year fixed rate mortgage still around 5%.
However, the government is considering a new Mortgage Guarantee Scheme, which will encourage more lenders to offer more 95% mortgages. Nothing is set in stone yet, but it could be a lifeline for those trying to get a foot onto the property ladder in 2025.
4. The Race is On For Stamp Duty Hikes
Stamp Duty relief will return to previous levels from April 1st. This means an additional cost of £2,500 for a home purchase, on average, with buyers in some areas facing hikes of £5,000 or more.
The result will be a rush to beat the deadline with deals being pushed over before March 31st. If deals aren’t finalised before the deadline, buyers could be tempted to return to negotiations with lower offers to reflect the additional taxation.
5. 2025 Will Probably Still Be a Buyer’s Market
While a spike in house sales is expected in the first three months of 2025, this will slow down once the Stamp Duty deadline passes. Analysts predict that the rest of the year will look like 2024, with the market shifting in the favour of buyers.
6. Housebuilding Will Be A Trending Topic
Labour has pledged to build 1.5 million homes in the next five years, although some argue that this is unrealistic. This puts them in an awkward position as it’s a lofty goal, and political opponents will be ready to pounce if house-building speed isn’t up to scratch.
To increase efficiency, the government will likely introduce initiatives to encourage more new home purchases. Again, this could be good news for buyers looking to buy a new-build home.
Conclusion
The housing market looks set to have an interesting year and hopefully, more people will be able to afford to get onto the property ladder. However, there’ll likely be twists and turns along the way, which is why professional mortgage advice is always a good idea.
To find out all about the mortgage opportunities for you and your loved ones, call our team on 020 8366 4400 or email enquiries@cedarhfs.co.uk.