A valuable insight into the UK’s home-selling and mortgage markets
This year’s key market trends and analysis offer valuable insights into the UK’s home-selling and mortgage markets. Rightmove’s forecast for 2025 highlights a dynamic picture shaped by affordability, competitive pricing, and increased market activity. With an estimated 1.15 million property transactions predicted for 2025, buyers are poised to benefit from an increasingly favourable market.
London, in particular, is anticipated to experience the beginning of a price resurgence. Following years of stagnation, the capital’s property market is expected to align with or exceed national price growth trends. The reassertion of London’s appeal to workers and international buyers will play a key role in this recovery.
Housing supply and buyer opportunities in 2025
The number of homes available per estate agent branch is higher than it has been in a decade for this time of year. This means buyers currently find themselves in a market rich with options. While demand remains strong, this competition among sellers has kept price growth moderate.
The analysis forecasts a continued strong housing supply throughout 2025, fostering a steady stream of transactions. The transactions highlight the market’s resilience and emphasise buyers’ willingness to engage, underpinned by improving affordability metrics and a steady economic recovery.
London property market poised for recovery
Historically, London’s housing market has lagged behind the rest of Great Britain in recent years. Between 2019 and now, the average asking price for a home in the capital has risen just 12%, compared to 21% nationwide. However, 2025 is expected to mark a turning point. Factors such as returning office workers, a resurgence of international investment, and corporate relocations are likely to provide a much-needed boost to the capital’s property prices.
The differential between average London property prices and the rest of Great Britain has also narrowed. While property prices in London were 101% higher than the national average in 2019, this has now reduced to 86%. This narrowing gap makes the capital increasingly attainable for potential buyers, ensuring a greater competitive edge compared to previous years.
Mortgage rates set to support affordability growth
When it comes to financing a home, the outlook also appears brighter. Mortgage rates are projected to fall to an average of around 4.0% for both two-year and five-year fixed-rate options by late 2025. This marks a decline from the current rates, at the time of writing, which stand at 4.83% and 5.08%, respectively. While these rates remain above the historically low figures seen before the cost-of-living crisis, the reduction will significantly enhance home-buying affordability.
However, experts caution that several unpredictable factors could impact these projections. Geopolitical tensions, inflation, and other economic variables could steer mortgage rates in unforeseen directions.
First-time buyers maintain market activity
Despite changing conditions, first-time buyers are anticipated to be pivotal in 2025. The impending 1 April 2024 rise in stamp duty rates might create a short-term rush, encouraging some buyers to complete their purchases earlier to mitigate increased moving costs. However, many homes across England remain under the crucial £300,000 threshold, allowing first-time buyers to sidestep hefty taxes.
Notably, the number of first-time buyers enquiring with agents has surged by 13% compared to the previous year. This reflects the ongoing struggle renters face with rising costs and broader economic confidence among prospective new homeowners. Experts believe this buyer segment will remain particularly active heading into the new year.
Remortgaging dominates lending strategies
For lenders, 2025 will mark a strategic pivot toward the remortgaging market, as many existing fixed-rate deals expire. Homeowners who secured five-year fixes during the pandemic boom will face new borrowing terms, likely at a higher cost. Conversely, those with post-mini-Budget two-year fixes could enjoy cost savings as rates soften.
The data indicates that product transfers and remortgaging are fast becoming key focal points for lenders eager to attract homeowners navigating these changes. This trend underscores a shifting lending landscape as providers cater to a varied borrower demographic transitioning between fixed-rate agreements.
