March 2025 Housing Market Update: Trends, Insights & What to Expect

Dear Readers,

As we step into March 2025, the UK housing market presents a dynamic landscape influenced by evolving economic conditions, policy changes, and shifting buyer preferences. 

Here’s an overview of the current trends, insights, and what to anticipate in the coming months.

1. Mortgage Rates and Buyers Market

The housing market continues to favour buyers, with an increased selection of properties and extended listing durations. Mortgage rates have seen a decline, with five-year and two-year fixed rates averaging around 4.0%, down from 4.83% and 5.08% respectively. This reduction is linked to anticipated Bank of England base rate cuts throughout 2025, enhancing affordability and boosting buyer confidence. 

2. Stamp Duty Adjustments

Effective April 1, 2025, stamp duty rates are set to rise, impacting purchasing costs for many homebuyers. The nil-rate threshold for first-time buyers will decrease to £300,000, with properties priced between £301,000 and £500,000 incurring a 5% charge. This change has spurred a surge in market activity, as buyers aim to finalise transactions before the deadline. 

3. House Price Trends

Experts predict a 4% increase in average asking prices by the end of 2025, aligning with long-term averages. This growth reflects improving market conditions, though sellers are advised to price competitively to attract buyers. 

4. Rental Market Dynamics

The rental sector is experiencing notable shifts, with a Zoopla study highlighting Britain’s most affordable cities for renters. Despite rising rent prices, cities like Burnley (£620/month) and Grimsby (£655/month) offer more affordable options. However, nationwide, average rents have increased to £1,284, with expectations of a 3-4% rise in 2025. 

5. Construction Sector Challenges

The UK’s construction industry is facing its most significant downturn since 2020, with notable declines in housebuilding and civil engineering activities. Economic uncertainties and elevated borrowing costs have contributed to this decline, potentially impacting housing supply in the near future. 

6. Policy Initiatives and Housing Targets

The government aims to meet ambitious housing targets by facilitating the construction of high-rise flats and addressing concerns associated with such developments. Shifting from leasehold to common-hold ownership models is being considered to make high-density living more attractive. However, unless safety regulations are reformed to streamline approval processes, developers may be deterred from building high-rises, potentially hindering progress. 

Looking Ahead

As 2025 unfolds, the housing market is poised for gradual growth, with buyers benefiting from favourable mortgage rates and a diverse property selection. However, challenges such as stamp duty changes, construction sector downturns, and rental market pressures necessitate careful navigation by all market participants.

Stay informed and make well-considered decisions to successfully navigate this evolving landscape.

Best regards,

MOVE OR IMPROVE UK