Rightmove is predicting a 4% rise in national average asking prices for 2025 – the property portal’s most optimistic price growth projection since 2021.

The pandemic years of 2020 through 2022 saw unprecedented price surges, driven by a mismatch between high demand and constrained supply.

In contrast, the market in 2025 is expected to be more balanced. The number of homes available per estate agent branch has reached its highest level for this time of year in a decade, offering buyers more choice than in recent years.

Rightmove anticipates that this supply will keep price growth moderate, while also boosting transaction volumes to around 1.15 million for the year.

LONDON’S BACK

A standout trend for 2025 is the resurgence of London’s housing market.

While asking prices in the capital have grown by 12% over the last five years, this lags behind the national average of 21%. The gap between London prices and the national average has narrowed significantly, dropping from 101% in 2019 to 86% today.

Rightmove predicts that 2025 could be a turning point for London. With more companies reinstating office-based work schedules and a renewed interest from international buyers, the capital’s housing market is expected to match or slightly exceed national price growth rates.

MORTGAGE INSIGHT

The average 5-year fixed mortgage rate is expected to fall to approximately 4.0% by the end of 2025, down from the current 4.83%.

Similarly, 2-year fixed rates are predicted to drop to around 4.0%, a decrease from today’s 5.08%.

While these rates remain higher than the ultra-low levels seen before the cost-of-living crisis, they signal a gradual return to more affordable borrowing conditions.

Matt Smith, Rightmove’s mortgage expert, says: “The trajectory of mortgage rates will depend heavily on external factors like inflation and geopolitical events.

“However, the trend towards improved affordability is a positive sign for many borrowers.”

REMORTGAGING

A significant theme for 2025 will be the remortgage market.

Many homeowners who locked in 5-year fixed rates during the low-interest environment of 2020 will face higher costs when their deals end.

For instance, someone who secured a 5-year fixed mortgage at an average rate of 2.55% in 2020 will now be looking at rates closer to 4.89% for a similar deal.

Conversely, those coming off 2-year fixed rates set during the mini-Budget crisis in 2023 may see modestly reduced costs.

This dynamic is expected to make remortgaging and product transfers a key focus for lenders, as they compete to attract customers with competitive offerings.

STAMP DUTY

With stamp duty thresholds set to tighten from April 2025, Rightmove forecasts a flurry of activity in the first quarter as buyers rush to complete transactions before the deadline. However, the availability of properties under £300,000 for first-time buyers is expected to sustain this segment’s momentum throughout the year.

Rightmove’s property expert Tim Bannister says: “We expect a busier year in 2025, with around 1.15 million transactions completed.

“Stamp duty charges rising from 1st April means we are likely to see a particularly busy first three months of the year as first-time buyers, home-movers and investors all try to complete on planned purchases and avoid higher charges.

“The effects of stamp duty rising will be felt for the rest of the year too, and we may see some negotiation tactics play out, particularly on properties close to the £300,000 mark, as both buyers and sellers try to mitigate their higher costs through the price agreed.”