The average price of a UK property entering the market decreased by 1.7% this month, equivalent to £6,395, bringing the typical home cost to £360,197, according to Rightmove. This decline aligns with the usual seasonal trend observed in December.
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December Dip, But Yearly Growth Positive
Despite the monthly fall, Rightmove’s data reveals that prices remain 1.4% higher than in December 2023. This figure aligns with the company’s projection of 1% price growth for the year. Interestingly, sales agreed are up 22% compared to the same period last year, and new buyer demand has increased by 13%, indicating a robust market despite the holiday season. Rightmove anticipates a further surge in activity following Christmas, a trend they’ve dubbed the “Boxing Day bounce.”
Market Activity Defies Festive Slowdown
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The traditional festive slowdown hasn’t dampened market enthusiasm. Tim Bannister, Rightmove’s Director of Property Science, notes that prospective buyers often utilize the post-Christmas period to kickstart their property search. He suggests that early birds in 2025 will likely find a wide selection of new listings. This increased activity suggests underlying market strength despite the December price dip.
Stamp Duty Deadline Drives Seller Behavior
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Rightmove’s analysis points to the approaching stamp duty deadline on March 31st as a motivating factor for sellers, particularly those with smaller properties in higher-priced areas. These sellers are aiming to complete transactions before the deadline to avoid potential tax increases. This suggests a strategic approach by sellers and could contribute to market activity in the first quarter of 2025.
Interest Rate Decision and Market Outlook
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The Bank of England’s upcoming interest rate decision on December 19th is a key factor influencing market sentiment. While the bank is expected to maintain rates at 4.75%, any change could significantly impact mortgage affordability and market activity. Bannister emphasizes that a rate cut and subsequent mortgage rate reductions in early 2025 could bolster confidence and stimulate the market.
Navigating Headwinds and Positive Forecasts
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Rightmove acknowledges potential challenges in 2025, citing budget measures as a potential headwind. However, separate research by the property portal forecasts a 4% rise in national average asking prices for 2025. This optimistic outlook is further supported by UK Finance, which predicts a 10% increase in mortgage lending for home purchases, reaching £148 billion in 2025. UK Finance anticipates improved mortgage affordability due to easing interest rate and cost pressures.
Conclusion: A Dynamic Market Poised for Growth
The UK property market presents a complex picture as it enters 2025. While December’s price dip reflects seasonal norms, underlying indicators suggest a resilient market with potential for growth. Factors such as the stamp duty deadline, interest rate decisions, and evolving economic conditions will continue to shape the market’s trajectory. Despite potential headwinds, industry forecasts point to a positive outlook for the UK property market in the coming year. Prospective buyers and sellers should carefully monitor these factors to make informed decisions in this dynamic environment.
