UK house prices predicted to rise in 2025 at highest rate in four years despite November dip after Budget
UK house prices are predicted to rise next year at their highest rate in four year, despite a dip this month following the Autumn Statement.
The average price tag on a home fell by more than £5,000 in November, according to Rightmove.
Across Britain, the typical asking price for a home coming onto the market is £366,592, down by 1.4% or £5,366 month-on-month, Rightmove said.
The usual drop seen at this time of year is 0.8%.
Rightmove publishes monthly house price data based on asking prices from the property listings on its website.
This means that properties could still sell for more or less.
November marks the second month in a row that price growth has been weaker than normal.
In October, prices increased by 0.3%, which was lower than the typical 1.3% rise for that month.
Looking ahead, Rightmove anticipates that asking prices will increase by 4% across 2025.
This is its highest prediction for increases in prices since 2021.
But it has warned that the market remains price-sensitive, with seller competition at its highest level for a decade.
It comes as experts predict that Bank of England base rate cuts are forecast to be slower-paced next year.
The BoE’s rate-setters reduced the base rate from 5% to 4.75% earlier this month,
Lenders use the base rate to determine the interest rates offered to customers on savings and borrowing costs, including mortgages.
Tim Bannister, Rightmove’s director of property science, said: “The big picture of market activity remains positive when compared to the quieter market at this time last year.
“This sets us up for what we predict will be a stronger 2025 in both prices and the number of homes sold, particularly if mortgage rates fall by enough to significantly improve affordability for more of the mass market.”
Rightmove stated it has also noticed fewer buyers contacting estate agents about homes for sale after the autumn Budget.
It followed a period of increased buyer demand in response to the recent Bank of England base rate cut.
However, the website still expects to see the usual seasonal slowdown in home-moving activity in the run-up to Christmas.
Mr Bannister said: “We now predict that we’ll see a stronger year for prices in 2025. The signs are that the market momentum we’ve been seeing this year will continue into next year, especially if mortgage rates drop to a level that gives greater affordability to some movers who have been waiting in the wings until now.
“However, we still expect some twists and turns next year.
“The speed at which mortgage rates come down next year will be key in determining activity levels for some of the market’s traditionally busiest periods, and sellers will still need to price temptingly enough to secure a buyer while the choice of homes for sale remains as high as it is right now.”
How to get the best deal on your mortgage
IF you're looking for a traditional type of mortgage, getting the best rates depends entirely on what's available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.
What it means for you
Rightmove is expecting to see a surge in the number of completed sales in March next year to beat the Stamp Duty deadline at the end of that month.
In the Autumn Statement, the government revealed that it had chosen not to extend the relief for those buying their first home, which had been set at £425,000 on a temporary basis in 2022.
This means that from March 31 next year, the nil rate band will revert back to £125,000, meaning an extra 20% of first-time buyers will have to pay more in stamp duty, according to experts.
Seller competition to find a buyer remains intense, with the average number of homes for sale per estate agent branch at its highest level for the time of year since 2014.
It means news sellers will need to continue being sensible with their price expectations to attract buyers who are spoilt for choice.
Alex Caddy, manager at Clarkes Estate and Letting Agency, said: “We have two camps of sellers at the moment – those without time pressure are holding fast with their asking prices, while others who reduce their price to attract a buyer more swiftly have more luck once they find a competitive price point.
“There are still many sellers planning their moves who are out looking despite not yet having a buyer themselves.
“There is certainly optimism that as first-time buyer activity picks up, this will create the much-needed knock-on effect to kick-start next year.”
Who else tracks house prices?
Halifax is part of Lloyds Group, which is the UK’s biggest mortgage lender.
Its monthly house price index is based on the mortgage data it holds and has been going since 1983.
It’s one of several key barometers of the property market.
The official measure of house prices is from the Office for National Statistics, which uses data from the Land Registry where the actual sold price is recorded.
This is the most accurate of all the indices, but the figures come out three months after the homes are sold, so there’s a big time lag.
Halifax and Nationwide each publish a monthly index tracking the average prices of homes on which they provide mortgages.
While they do adjust their figures to iron out big outliers, both lenders measure average house prices based on the properties they see.
As it’s based on mortgage approvals, this doesn’t include “cash buyers” who buy without needing a mortgage.
Rightmove and Zoopla also publish monthly house price data.
The former is based on asking prices from the property listings on its website.
Zoopla on the other hand uses sold prices, mortgage valuations and data on agreed sales.
Neither property website takes into account the price a property actually sold for like the ONS Land Registry, which could end up being higher or lower – and some might not even sell at all.
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