As part of our ongoing commitment to provide you with everything you need to know about the UK property market, we’re rounding up what happened during Q1 2025 and what to expect from the housing market in 2025.
As we enter April, homebuyers are increasingly focused on the future of the UK property market, particularly following the rush of activity that came from changes to Stamp Duty Land Tax rules.
While the spring statement didn’t have much in it for homebuyers, there’s no doubt that the UK Government is either making - or looking to make - sweeping changes to policy to ensure activity across the market remains consistent.
So how has the property market changed in Q1 of this year? And what should we expect from the UK housing market for the remainder of the year?
What’s happened in the UK housing market during 2025 so far?
Overall, UK house prices have largely remained the same over the last three months. While prices are still rising faster than they were this time last year, house price inflation is starting to slow.
This is largely due to issues with supply and demand. While the number of homes for sale is growing at a faster rate - there are 11% more homes for sale in the market compared to last year - the number of transactions is slowing, largely due to issues with affordability across key regions around the country.
Likewise, while we’ve seen 6% growth in average earnings over the last 12 months, factors such as higher stamp duty costs are essentially wiping out these earnings when it comes to home buying.
What can we expect from house price growth over the rest of the year?
With the issues mentioned above in mind, forecasts for house price growth are significantly lower than they were towards the end of 2024.
At the end of last year, Savills suggested that the average UK property would rise in value by 4% by the end of 2025. As of the end of Q1, the average UK house price has only increased by around 0.23%.
While there’s still 8 months to go in the year, it’s unlikely these forecasts will come to light, especially as the OBR has now decreased its own forecasts for economic growth - an issue that will likely impact UK property.
Zoopla also notes that concerns over inflation may mean fewer base rate cuts over the rest of the year. This will reduce the potential for mortgage rate cuts - another factor that would support buying power across UK households. At the time of writing, mortgage rates are sitting at 4.4% - up from 4% at the end of last year.
How does the market look for first-time buyers?
Across both the Autumn Budget and the Spring Statement, a major talking point for the Chancellor has been supporting first-time buyers (FTB) to get on the property ladder.
While the first-time buyer demographic has drastically changed over the last two decades, the average age of a FTB is now 34 compared to 29, the issues are largely the same - challenges with affordability and choice.
Also, take into account the end of the Stamp Duty holiday for FTB. As of April, the 0% threshold for first-time buyers is now £300,000 rather than £425,000, reducing the amount of support for this demographic.
All of this - alongside rising rents and living costs - means it’s taking young people much longer to save for a first deposit. When we also take into account the lack of available homes on the market, there’s not much to suggest this will change for first-time buyers in 2025 - especially until planning reforms come into effect.
Affordable home ownership schemes supporting struggling demographics
As you’d imagine, while the UK market is affected by the factors mentioned above, the strength of home ownership schemes such as shared ownership and rent-to-buy are pulled into sharp focus.
We’ve already heard of plans to increase investment in these schemes, although this will inevitably take time to come to fruition. Likewise, the Government’s pledge to build 1.5 million homes and reform planning policies will significantly ease pressure on supply and demand if they can achieve their targets.
For aspiring homebuyers in 2025, then, it’s worth looking into these schemes and how you can get a foot on the ladder without having to save for a huge deposit at a time when mortgage rates, high rents and other factors are essentially limiting buying strength.
