The London property market concluded 2024 on a positive note, despite buyers remaining cautious about pricing and mortgage costs. Zoopla reports that over 280,000 homes valued at £104bn are lined up for sale in 2025 – the largest figure in four years.
Additionally, house prices have seen an uptick of 1.9 per cent compared to the previous year, following a period of stagnation for most of 2024. Zoopla's projections indicate a 2.5 per cent increase in house prices for 2025, with transaction numbers expected to rise from 1.1 million in 2024 to 1.15 million, as reported by .
A significant shift this year has been the Bank of England's decision to cut the base interest rate twice, bringing it down to 4.75 per cent from 5.25 per cent. This move has led to lower interest rates, making housing more affordable and spurring demand.
However, some analysts believe recent budget announcements may alter this trajectory.
The Budget has prompted buyers to reconsider their spending, as mortgage rates begin to climb and the economic and employment outlook becomes uncertain post-Budget. Economic growth has faltered in the second half of the year, and businesses have issued stark warnings about how the Government's tax increases could impact hiring and investment plans.
"More sales have supported a return to house price growth across the country but home buyers have become more price-sensitive in recent weeks as mortgage rates drift higher," said Richard Donnell, Executive Director at Zoopla.
"Affordability constraints will keep the pace of house price growth in check over 2025, but there will be enough price inflation to support five per cent more home moves," Donnell added. The North-South divide is expected to persist, as since 2010, house prices in the southern part of the country have surged significantly more than those in the north.
In London, the average house price has soared by 83 per cent, while in northern England and the Midlands, prices have increased by 41 per cent and 66 per cent, respectively. This disparity becomes even more pronounced when comparing England to other º£½ÇÊÓƵ countries: Scottish house prices have risen just 30 per cent, and those in Ireland by 19 per cent.
Consequently, analysts predict that house prices are likely to climb faster in the north than in the south, buoyed by rising salaries nationwide.
