Rising Buyer Demand

The 2025 property market is off to a strong start. Buyer demand is up 14% compared to the same time in 2024, according to Zoopla’s latest data. This increased demand is reflected in an 11% rise in new sales agreed, signalling a rise in the market.

Demand is expected to remain robust throughout 2025, creating a competitive environment for homebuyers and investors. As more buyers enter the market, securing properties will become more challenging. This will eventually drive price growth and potential returns for those looking to invest.

However, the supply of new homes remains an issue. In December, S&P Global reported that the construction of housing fell to its lowest level in six months. Highlighting ongoing supply constraints. Even though more homes are expected to be built in 2025 than in 2024, the construction rate is still expected to be below the government’s target of 370,000. This shortfall will likely continue to put pressure on housing prices.

Largest January Price Growth in 5 Years

In 2024, the UK property market experienced a solid 4.7% price growth, marking the third strongest year in the past decade. This steady upward growth signals resilience and ongoing demand in the market, providing an attractive environment for investors.

Looking ahead to 2025, January saw an encouraging 1.7% increase in property prices. While this might initially seem modest, it’s the largest growth in the first month of the year in the past five years. This early surge is a strong indicator of a healthy market we can expect to see in the new year.

On a year-on-year basis, property prices have risen by 3.3%, pushing the average house price to £297,166, according to Halifax. For investors, this combination of consistent growth and early-year momentum presents a promising window to secure opportunities in a thriving property market.

Mortgage Rates Remain Steady

Mortgage rates are currently holding steady at an average of 5.02% for a 2-year fixed rate and 4.8% for a 5-year fixed rate. Offering a stable environment for property investors looking to lock in favourable terms.

Looking ahead, the Bank of England’s base rate is forecasted to decrease to around 4% throughout 2025, although there have been no indications of changes in the first quarter. These changes are reliant on broader economic factors, so there’s potential for further adjustments as conditions evolve.

For investors, this presents a strategic opportunity to secure a property in a market with relatively stable borrowing costs and the predictions of favourable conditions ahead. The combination of stable rates now and anticipated rate cuts in the near future creates an ideal window to invest and secure the best available rates.

An Active Rental Market

In the year leading up to December 2024, UK rents saw a significant 9.0% increase. As we move into 2025, this trend continues with a 3.9% rise in rental prices in January compared to the same time last year. This pushed average monthly rents across the UK to £1,270.

This performance in the rental sector is driven by continued demand combined with limited supply, creating a market where rents are expected to remain strong. The growing tenant population and a shortage of available properties mean investors can continue to capitalise on the pressure in rents. 

With the rental market predicted to stay buoyant for the foreseeable future, there has never been a better time to invest in buy-to-let properties. Strong rental growth, coupled with high demand, offers investors the potential for consistent cash flow and long-term capital appreciation.

Despite the strong start to 2025, there are many upcoming changes creating uncertainty. One of these changes includes the stamp duty changes coming on the 1st of April. This will see the introduction of the stamp duty threshold falling to £125,000 rather than £250,000. 

The New Rates from 1st April:

Single Property 

up to £125,000 = 0%

£125,001 – £250,000 = 2%

£250,001 – £925,000 = 5%

£925,001 – £1.5 million = 10%

Over £1.5 million = 12%

+ 2% surcharge for overseas buyers

+ 5% surcharge for second properties

Use our Stamp Duty calculator, here

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