We look at the predicted property market trends for 2025. With a new government and the recent budget, what do experts think next year will look like for the housing market? Read on to find out…

House prices and the impact of stamp duty

This is a bit of a grey area for property experts right now. Initially, property market trends pointed towards positive house price growth in 2025. Now, we are seeing some experts scale back the extent of this growth. Zoopla themselves have stated that stamp duty changes will inhibit house price growth in 2025.

As we know, the stamp duty thresholds will be returning from £425k to £300k for first-time buyers and from £250k to £125k for homeowners in April 2025. You can read more about this in our article on the Autumn Budget 2024 here.

A closer look at the research by Zoopla

Zoopla has done some analysis of the enquiries to estate agents through their property portal, to show how many people would be affected by these stamp duty changes.

The figures they have shared show that 83% of buyers currently looking for a home will pay more Stamp Duty come next April, compared to 49% of buyers now.

Looking more closely at these figures, homes between the £125k and £250k bracket will affect a third of buyers. Most of these are in the Midlands and North of England (67%). For homes above £250k, their figures show 49% will pay the extra £2,500.

The Executive Director at Zoopla, Richard Donnell says. “The growing complexity of Stamp Duty Land Tax makes assessing its impact on market activity and pricing difficult. Whilst an additional Stamp Duty payment of £2,500 might be more manageable for those buying £1m homes, it’s a much bigger cost for those buying cheaper homes.”

Many in the property industry are of the same thinking. That the increased costs will only be reflected in what buyers are prepared to pay. And this will see an adjustment in property prices. Experts are talking about an expected 0.5% – 1% which could be knocked off house price growth. This may well cause house prices to stagnate. But there are also fears we could see a North/South divide when it comes to price growth.

The future of private rents

There was some new ONS data released recently showing private rents have grown by 8.7% in the 12 months to October. This is a small increase compared to the 12 months to September, where the rental growth was 8.4%. The data also shows average rents increased to £1,348 in England in the 12 months to October 2024.

When it comes to property market trends in the lettings sector, the main issues of limited rental stock and persistent high demand remain. The effects of affordability and renters’ budgets are beginning to limit much further increase in rents for now, which is good news for tenants. But ultimately, it’s felt that the imbalance between demand and supply will override affordability. This will lead to rental prices  increasing throughout 2025 and beyond.

There are further tough times ahead for landlords too. Stricter regulations and uncertainty around what the Renters’ Rights Bill might bring. We’re starting to see landlords sell up and adjust their portfolios in the area after the budget. There are those who are ready to adapt their properties to make them more energy efficient for example. But will we have enough new rental stock coming through? Many experts are concerned that the increase to the Stamp Duty Land Tax surcharge on second homes will deter new buy-to-let investors as much as those looking to expand their portfolios.

We must ‘wait and see’ as we approach 2025

For now, we are seeing a busy selling period with lots of new homes coming onto the market for sale. We expected this after the budget announcement, with people looking to make their property transactions before the Stamp Duty changes takes place.

But for all of us in the property market, it’s a ‘wait and see’ game as we approach 2025. From mortgage rates to the impact of tax increases, general affordability and inflation will determine buyer and seller confidence.