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Property Market Update
Well, it is shaping up to be one of opportunity in 2025. With various economic, political and market factors aligning, the year promises a balanced and positive outlook for both buyers and sellers alike.
Rightmove experts are predicting that national average house prices will increase by 4% by the end of 2025, the largest growth they have predicted since 2021. Prime areas like Surrey and South West London will potentially outperform the national average due to sustained demand and desirability. Rightmove experts also predict more completions in 2025 than in recent years, reduced mortgage rates and four Bank of England Base Rate cuts.
2025 is likely to see a busy start to the year with activity bolstered by delayed 2024 moves and impending stamp duty increases. 2024 has been a largely resilient year, with plenty of activity in the property market despite a narrative of higher mortgage rates and political uncertainty. However, there is a feeling that the uncertainty and higher rates did lead to hesitation and delayed moves that could bolster early activity in the 2025 property market.
Stamp Duty increases on 1st April are also likely to lead to an increase in activity in the first three months of 2025. Currently, first-time buyers are exempt from Stamp Duty on properties up to £425,000 and pay 5% on the portion between £425,001 and £625,000. This first-time buyer relief is set to expire in April and the exemption limits are set to reduce, with no Stamp Duty on the first £300,000 and a 5% rate on amounts between £300,001 and £500,000.
The recent election of a Labour government brings with it an ambitious housing agenda, with proposed housing reforms including a target of building 1.5 million homes over five years. Policies aimed at increasing the availability of affordable housing, alongside investments in sustainable construction practices, are likely to benefit the property market. Further clarity on planning reform and a defining of the ‘grey belt’ in 2025 will also likely bolster the local property market. For buyers in Surrey and South West London, these initiatives may translate into increased housing stock and more competitive pricing in certain segments.
Another key factor shaping the property market in 2025 are of course mortgage rates. Many analysts predict that the Bank of England will gradually reduce the base rate to around 3.5% by mid-2025. This adjustment reflects cooling inflation and improving economic conditions, with lower base rates typically leading to more competitive mortgage offerings. According to Rightmove, mortgage rates for fixed-term products could stabilize at around 4% or lower for many borrowers in 2025, leading to reduced monthly repayments and improving overall affordability.
Whilst 2025 is sure to see a change in the landscape of the lettings market owing to the impending Renters Rights Bill, the key indicators on supply and demand demonstrate that rental values remain very strong as we head into this new year. Applicant demand is high across all demographics, with young professionals still seeking lifestyle shifts out of central London in favour of commutable towns within where they can find better value rental properties and growing families relocating in order to benefit from the excellent private and state schooling in our areas. Quality rental stock will remain in short supply and whilst we understand ongoing changes in legislation can be daunting for landlords, those who can safely navigate any changes this year should stand to benefit as they will have fewer substandard rental properties to compete against and greater choice of tenant if the Renters Rights Bill is passed.
Overall, 2025 is poised to be a year of opportunity for the Surrey and South West London property markets. Buyers can look forward to greater affordability and choice, while sellers stand to benefit from increased activity and interest. As the market evolves, partnering with an experienced estate agent like Curchods can help you navigate these trends and make the most of what 2025 has to offer. Whether you’re buying, selling, letting or renting, or simply exploring your options, the year ahead holds promise for all.
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