Strong overall house price performance
According to Rightmove's report, average UK house prices surged back by 1.7% in January 2025 compared to the previous month, demonstrating strong market momentum. Compared to the same month last year, the average property listing price in January 2025 also rose by 1.8 per cent to £366,189 . This is the biggest price increase at the start of the year since 2020, bringing the first ‘gift’ of the New Year to the UK property market.
Significant differences in housing prices by region
From the regional distribution point of view, the performance of house prices in various regions of the UK shows obvious differences. In terms of the annual rate of increase, in addition to Southwest London, other regions have risen, of which the Northeast region with a 6.2 per cent increase in the top of the list. The much talked about London region showed a decline of 1.3 per cent, but in terms of monthly increases, it achieved a rebound of 1.8 per cent, with the latest average total price of £673,483. The chart below shows (January 2024 - January 2025) the list of house price increases and decreases by London borough:
Specifically for the London boroughs, Merton, Barking and Islington saw the most significant annual house price increases, rising by 7.5 per cent, 5.3 per cent and 5.3 per cent respectively. Out of a total of 32 London boroughs, 22 achieved year-on-year house price rises, while 10 saw flat or falling house prices, with the Westminster area experiencing the largest decline at -4.8 per cent.
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Increased market activity
The report also notes that the number of buyers contacting agents since last Christmas has increased by 9 per cent compared to the same period last year, and the number of sales agreed has increased by 11 per cent over the same period. This suggests that activity in the UK property market is increasing, with both buyers and sellers becoming more engaged.
Meanwhile, new sellers have kicked off the new year with impressive momentum. A record number of sellers have entered the market so far this year. This provides buyers with more options, but it also means sellers need to work harder to stand out. As a result, attractive asking prices, great home features, and perfect home presentations will all be key factors for sellers to attract buyers.
Future Market Outlook
Despite a promising start to 2025, the future of the UK property market remains uncertain. Among other things, the magnitude and number of interest rate cuts and the cut-off of the stamp duty holiday on 31 March will have a significant impact on the market.
Lower-than-expected economic growth data has led the market to believe that the Bank of England is almost certain to cut interest rates from 4.75% to 4.5% at its next meeting on 6 February. The rate cut will stimulate more loan buyers to enter the market aggressively, which may further push up house prices. However, the end of the ‘stamp duty holiday’ may also have a negative impact on the market, reducing the enthusiasm of potential buyers.
Therefore, for prospective buyers, the period between the February interest rate cut and the end of March may be a ‘golden period’ for buying a home. During this period, consumers can pay close attention to market dynamics and seize the opportunity to buy a home.
In summary, the January 2025 surge in UK house prices is a positive sign for the market. However, in the face of future uncertainty, consumers and investors should pay close attention to market dynamics and policy changes. Meanwhile, for sellers, upgrading the quality and presentation of their homes will be key to attracting buyers.
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