Prices bounce into 2025: London leads the charge
The UK property market begins the new year on a note of cautious optimism, according to Home.co.uk’s Asking Price Index for January.
Prices are rising in line with seasonal expectations and buyer activity is picking up. Increased supply attests to the fact that greater numbers of vendors are willing to commit, especially in London.
But whether demand will be able to match this level of supply is uncertain, especially after the increase in stamp duty from 1st April 2025.
With unsold stock levels at a nine-year high and supply still rising, there is a notable amount of downward pressure on prices.
However, regional differences are considerable, and we expect home prices in the North, Scotland and Wales to continue to outperform London and the South.
Market expectations are for a rate cut by the Bank of England in February and, should this materialise, buyer confidence may get the fillip it needs, at least in the short term.
For the time being, the vital signs of the UK property sales market indicate a positive state of health overall. The volume of property moving through the market is higher than during most of the five years prior to the pandemic.
Room for significant price growth appears limited due to both affordability constraints (the cost of borrowing and stamp duty) and increased supply.
The mix-adjusted average asking price for London and the southern regions remains lower, by a large margin, than the peak pricing observed in the summer months of 2022. Therefore, prices may not return to these levels in the lower performing regions in 2025.
UK asking rent growth remains sub-inflation at 1.5% overall. However, the national average is dragged down by Greater London at -1.9% while the best performers, East Midlands and Yorkshire, indicate 12.7% and 11.5% growth year-on-year respectively.
The annualised mix-adjusted average asking price growth (sales) across England and Wales is now 1.9%; in January 2024, the annualised growth of home prices was -0.5%.
