2025 housing market forecast: 5 things you need to know

Thinking 2025 could be the year you make your move? Then you’re likely wondering what the next 12 months could hold for the housing market. Take a look at the key predictions from our in-house experts, to make sure you start your moving journey as prepared as possible.

1. 2025 will still be a buyers’ market

We talked about 2024 being a buyers’ market, and next year is set to be no different. Things like an improved choice of homes for sale and longer average time to sell means home-buyers will continue to have the upper hand when it comes to agreeing a sale. 

But what could happen to house prices? Well, our experts predict that average asking prices will increase by 4% by the end of next year, which, even though the largest growth we’ve predicted since 2021, is in-line with the long-term average. For context, the pandemic years of 2020 to 2022 saw extraordinary price growth, driven by lots more people looking to move than there were homes for sale. 

We expect around 1.15 million completions to happen in 2025, which is an increase on recent years. This activity reflects improving market conditions, but sellers will still need to price competitively in order to find a buyer.

2. Mortgage rates look set to fall, but not to historic lows

Five-year and two-year fixed rates could drop to around 4.0% in 2025, down from the current 4.83% (5-year fixed) and 5.08% (2-year fixed) averages*. 

This reduction in average mortgage rates is tied to predictions of four Bank of England Base Rate cuts in 2025. But as always, external factors like geopolitical events and inflation could still change the future direction of rates.  

For those deciding between fixed-rate options, two-year deals may become increasingly attractive as their costs align more closely with five-year rates. This trend reflects shifting preferences, with shorter terms potentially offering better flexibility. 

3. Stamp duty changes impacting buyer activity

From April 1, stamp duty rates are set to rise, which could mean increased buying costs for some home-movers. Our data has shown a rush among some buyers aiming to complete their purchases before the deadline. The number of first-time buyers that are active in the market and sending enquiries to agents is 13% ahead of the same period last year. 

The availability of stamp duty-free homes for first-time buyers varies by region. While only 8% of London homes will qualify, over 70% of properties in the North East fall within the new £300,000 threshold. 

4. Remortgaging will be a big focus for mortgage lenders

If you’re nearing the end of a fixed-rate mortgage deal, remortgaging will likely be on your radar in 2025. Many homeowners who secured five-year fixes during the pandemic, or two-year fixes after the mini budget will face the decision about their next mortgage as their deals come to an end.