2025 may well be the year that buyers and sellers have been waiting for, with greater activity expected as sentiment improves.

Falling mortgage rates will stimulate demand

With inflation and interest rates back to more normal levels, mortgage rates are also falling. According to Rightmove, mortgage rates of around 4% are expected this year as further cuts to the base rate take effect. Following January’s announcement of inflation hitting 2.5% in December, the first base rate cut of 2025 could come as early as February at the next meeting of the Monetary Policy Committee. Some forecasters have predicted up to four base rate cuts this year.

A first-quarter rush ahead of stamp duty increases

One of the biggest impacts expected on the rate of home sales in 2025 is the pre-stamp duty change rush expected in the first quarter. From 1 April stamp duty thresholds reduce, coming into effect on properties from £300,000 rather than the £450,000 applicable before. This will mean increased costs, particularly for first-time buyers who may have less cash to spare.

In December, Rightmove noted a 13% increase in new buyer demand compared to the same period last year in what is traditionally a quiet period for house sales. This has continued into January with the number of buyers contacting agents since Boxing Day up 9% ahead of last year. This is attracting new sellers, with the number of new properties coming to market up by 11% and the number of homes for sale per estate agency branch at its highest in 10 years.

Much of this activity is likely to be buyers acting earlier than they’d initially planned to avoid the higher prices. This could cause a lull in transactions after the change. This has happened following previous stamp duty changes, although the lower mortgage rates could help to offset this as affordability improves.

Increased seller asking prices

Asking prices will continue to rise during the year, in part driven by the expected falls in mortgage rates which will attract more buyers to market. Rightmove expects prices to rise by 4% this year. Nationwide expects growth ranging from 2 to 4% in 2025 after UK house prices ended the year up by 4.7% year on year in December, according to its research. In January, Rightmove reported that the average property price rose 1.7% during the month to £366,189, the largest jump in prices at the start of the year since 2020.

Greater attention to energy efficiency

Energy efficiency has been on buyers’ radars for some time. Buyers are aware that improved energy efficiency saves them money and enables them to reduce their environmental impact. The government is reviewing how Energy Performance Certificates, which outline potential energy costs and environmental impacts of a property, are rated. It is also in consultation on its plans to require landlords to boost the rating of their properties to an EPC rating of C or equivalent by 2030.