UK Home Prices Start the Year With Biggest Rise in 20 Months
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Loading... - Luna Alfaro
- 22 Jan 2025
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As the UK property market enters 2025, asking prices for homes have surged by the most significant margin in over 20 months, signaling a resilient confidence among sellers and buyers alike. According to data from Rightmove, the average asking price for properties listed in January climbed by 1.7%, reaching £366,189. This increase marks the largest rise for a January since 2020 and the most substantial monthly gain since May 2023.
Surge in New Listings
Rightmove reported a record number of new sellers entering the market since Boxing Day (December 26), suggesting a proactive approach from homeowners looking to capitalize on favorable market conditions. Some analysts speculate that this influx of listings may be driven by a rush to sell before an anticipated increase in stamp duty—a tax on property transactions—set to take effect in April, which will lower the thresholds for tax liability.
Despite the challenges posed by rising mortgage rates, which have been creeping higher since the UK budget announcement in October, sellers appear undeterred. This optimism comes even as Halifax data indicated a decline in prices for the first time in nine months in December.
Rising Borrowing Costs
The landscape for homebuyers has become more challenging, with borrowing costs continuing to rise. According to Moneyfacts, the average two-year fixed mortgage rate has increased to 5.52%, up from 5.39% prior to the Labour government’s budget, which dampened expectations for interest rate cuts by the Bank of England in 2025.
Matt Smith, a mortgage expert at Rightmove, noted, “As we step into 2025, the housing market is already showing signs of robust activity, with demand from buyers increasing year on year.” He emphasized that the number of properties coming to market has risen by 11% compared to the previous year, although he cautioned that some sellers might be overly optimistic with their initial pricing in a competitive market.
The early signs of 2025 indicate a dynamic UK housing market, with rising asking prices and an influx of new listings reflecting seller confidence. While challenges remain due to increasing mortgage rates and economic uncertainties, the current trends suggest a resilient property market poised for activity. As sellers respond to strong buyer demand and stable property prices, the coming months will be crucial in determining whether this upward momentum can be sustained amidst evolving economic conditions.
