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UK PROPERTY MARKET: LOOK BACK AND 2025 FORECAST

The UK property market experienced a more positive 12 months throughout 2024 compared to the previous year, characterised by a change in government and more favourable wider economic factors such as base rates and mortgage affordability.
As the Labour government implemented new measures impacting the property market, the last quarter of 2024 brought huge changes to the property landscape, but industry experts remained optimistic with their predictions for the year ahead.
Below, we delve deep into the UK property market forecast for 2025.

Buyer Demand

In the latter half of 2024, demand for property was improving, driven by a more favourable lending environment and increased buyer confidence. In fact, HM Revenue and Customs (HMRC) data revealed that October 2024 saw 100,410 property transactions—the highest since November 2022.

This momentum continued, despite changes to the property market and wider economic landscape. Recent HMRC national statistics reveal a substantial increase in seasonally adjusted residential transactions – particularly in the lead up to Stamp Duty Land Tax deadline in April 2025.

According to the data for February 2025, transactions were up by 13% from 95,790 in January 2025 to 108,250 in February 2025. Non-seasonally adjusted residential transactions increased by 10% in February 2025 relative to January 2025.

Rightmove have recorded a 5% increase in demand  in April, compared to the same period in 2024, as well as a 4% annual increase in sellers coming to market.

Increased International Demand

Interestingly, both demand and ownership from international buyers grew, despite the Labour government’s changes to the non-dom status.

Recent research by Benham and Reeves obtained from Land Registry data revealed that foreign ownership was up 2.6% in 2024 compared to the previous year, with Hong Kong retaining the top spot for highest levels of property ownership with 13.7%. The biggest increase in demand came from China, with an impressive 12.9% increase from the previous year.

With this in mind, let’s delve deeper into a UK property market forecast for 2025.

The Rental Market

The UK rental market also experienced significant increases in 2024 as a result of a lack of rental properties paired with consistently high demand.

According to latest figures from JLL, residential rents across the UK are expected to increase by 3% over the next 12 months, having already increased exponentially by 27% in the five years up to September 2024.

This upwards trend shows no signs of slowing, as JLL predicts that UK rental prices will grow cumulatively by 17.6% between 2025-2029, with Central London exceeding this with 18.7% cumulative growth. So, as renting becomes more expensive and UK property market forecasts continue to anticipate growth in the long run, those with a long-term outlook stand to gain more by climbing the property ladder sooner rather than later.

UK property market

UK Property market forecast for 2025

With transactions well above the average in the run up to the Stamp Duty deadline, we anticipate a period of cooling off over the next month of two. But things are looking incredibly optimistic for the UK property market in the coming months.

Things are off to a great start, with a recent UK House Price Index revealing that property prices increased by 4.9% in the year to January 2025, up from the revised estimate of 4.6% in the 12 months to December 2024. Rightmove data also indicated that the average asking price of homes coming onto the market had reached a record high of £377,182 in April, giving a monthly increase of 1.4% – higher than typically seen at this time of year.

This market growth looks likely to continue, with several industry experts collectively predicting an upward trajectory for the UK property market, stabilised by a better economic landscape and more certainty.

JLL predict 3.5% growth in property prices this year, increasing to 4% in 2026 and 4.5% in 2027. They anticipate cumulative growth of 19.9% by 2029.

Meanwhile, Savills agree that year-on-year growth will slowly increase over the next few years. Their forecasts suggest 4% property price growth this year, increasing to 5.5% in 2026, with a cumulative growth of 23.4% by 2029.

Mortgages are set to remain a key factor in the property market, with strong expectations that the Bank of England will continue to lower base rates. There is growing confidence that the Bank of England will reduce its benchmark rate from 4.5% to 4.25% on 8th May, with up to three additional cuts expected later this year, aiming to boost market activity. Previous rate reductions have already expanded options in the mortgage market, including an increase in low deposit offerings. This would lower mortgage rates further and help stimulate demand, a trend already in motion, as data from Moneyfacts shows that the number of mortgage deals requiring a 5% or 10% deposit has reached its highest level since previous cuts.

London Property Market Set to Outperform UK

Historically, London’s property market has always been strong, and UK property market forecasts agree that while the prime central London market remain subdued, property prices will grow stronger in London than in other parts of the UK over the next five years.

JLL forecast Central London to experience 3% growth over the next 12 months and 22.2% cumulative growth between now and 2029 – once again outperforming the rest of the UK’s 19.9% forecasted growth.

Similarly, KnightFrank predict the prime central London property market to reach 2% growth over the next 12 months, with a 5-year cumulative growth of 21.6% – outperforming the rest of the UK’s 19.3%.

Overall, it seems many UK property price forecasts agree that there will be further improvements to housing affordability for homebuyers throughout 2025, with interest rates predicted to decrease further, property price growth on an upward trajectory and buyer demand – both domestically and internationally – remaining strong despite external economic factors.

Read our comprehensive London property market forecast here.

London Property Market Forecast 2024

Overall, it seems many UK property price forecasts agree that there will be some improvements to housing affordability for homebuyers throughout 2024, with interest rates beginning to drop, property price growth set to slow and buyer demand remaining strong despite external economic factors.

With mortgage rates beginning to fall and more affordable mortgage offers coming back onto the table, schemes to help homebuyers get onto the property ladder and sustained homebuyer confidence; there is still plenty of opportunity for first-time buyers and home movers to buy property and reap the financial rewards in the years to come.

Similarly, with rental demand and prices following the same upward trajectory throughout 2025, property investors are presented with a prime opportunity to yield a healthy return on their investment. With rental demand remaining high, and industry expert forecasting further increases, 2025 is a great time to invest in buy-to-let property.

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