So, what are some of the upcoming changes that are likely to affect the housing market in 2025?
The impact of the US
Well he is back, Trump has started his second term in office and it will be interesting to see how the USA and the rest of the world react to his new legislations. Tariffs on the commodities that we export to the USA and the changing geopolitical situation could have an adverse effect on our economy.
Looking ahead in the UK property market, borrowing constraints remain a challenge for many buyers. Following the budget, as expected the Bank of England cut their interest rate although not as much as previously anticipated. This may keep mortgage costs higher for a little longer. New policies like high stamp duty for second homebuyers and a return to the previous thresholds for first time buyers may also affect demand.
Growth in the housing market for 2025
Having said that, Cobb Farr have experienced an increased demand for property in the New Year. Despite the headwind of higher interest rates, house prices have mostly levelled off over the past 2½ years recording a 0.2% increase overall. This is compared to the 21% rise we saw in the equivalent period From January 2020 to the summer of 2022.
The Halifax reported that ‘house prices have risen consecutively over the past few months; the Northwest remains the region of England with the strongest growth, however in the Southwest prices have risen by around 3%’, says Amanda Brighton, Head of Mortgages at Halifax.
Despite the affordability challenge, Cobb Farr has seen market activity improving. Again according to the Halifax, the number of new mortgages agreed recently reached its highest level in two years. This aligns with the average mortgage rate dropping steadily since the spring of last year.
Changing interest rates
We at Cobb Farr expect house prices to keep growing. However it is likely to be at a modest pace for the rest of the year and next. Knight Frank residential research commented that the interest rate landscape has become more adverse recently which will in the short term increase downward pressure on house prices.
The budget signalled higher levels of public borrowing and the impact of a Trump presidency on UK interest rates is harder to predict; the UK’s appeal among investors could grow which potentially will put downward pressure on the rates in the longer term.
For now, anyone deciding whether to fix for two or five years must consider whether they think that Labour’s revenue raising plans will work or more rate turbulence lies ahead.
As we have said, there does appear to be an increased momentum in the housing market currently although a lack of stock is reducing the choice of property available. Philip Cobb of Cobb Farr believes ‘now is a good time to place your property on the market as buyers Will pay a premium for the right property in the right location’.
Upcoming changes to legislation
In the rental market, new research gathered has painted a picture of a sector under increasing strain as it anticipates significant legislative changes within the forthcoming renters Bill.
Key findings from the survey on ‘Landlord sentiment’ included that 67% believe the private rental sector has deteriorated with nearly half planning to leave within five years. 75% of landlords have been in the sector for over a decade with just 3% of landlords entering the market in the past year.
From the tenant’s point of view the survey found the 88% of tenants site rising rent as the biggest challenge with affordability being a critical issue. Interestingly, only 6% of tenants feel the right to request a pet is the most important provision of the renters rights Bill!
Advice for navigating the housing market in 2025
70% of landlords owned between two and five properties making them the most vulnerable to increasing costs and taxation. The view of the rental department within Cobb Farr Is that the current market may present ideal opportunities for buyers to enter the investment market particularly as currently rents are strong and are only likely to increase with the legislation looming.
‘Providing that our landlords have made the necessary energy efficiency upgrades, we do not feel that people with one or two properties should have too many concerns about the legislation programmed for later in the year’, says Philip.
Looking to sell or rent your property?
For any further advice on either renting your property or selling your property please contact our team within the Bath or Bradford on Avon offices for free advice.
