Outlook and predictions for the London property market in 2025

With consecutive rate cuts and sluggish house price growth, the latter half of 2024 shaped up into a buyers’ market. With further rate cuts on the horizon and an improvement in housing stock, experts believe 2025 will be another positive year for home buyers, with over a million completions expected this year.

Let’s look at some predictions supporting this sentiment of a market boom in 2025.

Buyers to have the upper hand

According to Rightmove, the number of properties for sale per estate agent at this time of the year is at its highest in a decade, signalling improved stock availability that gives buyers more choice and negotiation leverage. In Q4 2024, the number of homes available for sale was 12% higher YoY.

Unlike the pandemic years before 2023, when house prices grew exponentially due to a supply-demand imbalance, sellers must be more price-sensitive when listing their properties. With around 1.15 million property purchases expected this year, 2025 will see an improvement in buyer activity compared to its recent predecessors.

A further drop in mortgage rates

Although many experts predict the Bank of England (BoE) will announce four base rate cuts (one per quarter) across 2025, bringing the cost of borrowing down to 3.75%, Rightmove predicts the five-year and two-year fixed rates to drop to around 4% this year, from its current averages of around 4.8% and 5% respectively.

However, the rate cuts depend on geopolitical and macroeconomic factors, such as inflation and wage growth. With the reduced gap between fixed-rate options, two-year deals may attract more buyers as shorter terms usually provide better flexibility. You can use our mortgage calculator to estimate expected costs.

Changes in Stamp Duty to cost buyers

As announced in the Autumn Budget, stamp duty relief will expire this Sspring, starting 1st April. This means there will be a rush to complete transactions in the first quarter, with Rightmove reporting the number of first-time buyers approaching estate agents to be 13% higher during the same time last year. While only 8% of London residential properties fall under the £300,000 threshold, many buyers are expected to negotiate hard for properties around that price range to avoid paying Stamp Duty.

London to lead the new housing market cycle

Rightmove reported the average asking price in the UK capital to have risen by 12% in the last five years, compared to the 21% average across the country. However, with more employees returning to offices and better mortgage deals on the table, many experts have predicted a rebound in London property prices, expecting a 4% growth in 2025.

As prime central London faces the direct impact of higher Stamp Duty and an end to the ‘non-dom’ tax status, growing markets outside Westminster and within commuter-friendly areas will likely see better growth. Here are some hotspots around London where investors and buyers will likely find better affordability and value for money.

Rental growth to continue attracting investors

Albeit at a slower rate, rents across London continue to rise, and with more additions to the workforce and student population, rental demand is likely to swell further. With average rents across the country 4.5% higher than this time last year and rents in London up by 2%, Rightmove predicts a 3% increase in asking rents this year.

Across our London branches, we have seen a significant increase in tenant enquiries despite average asking rents continuing to touch new highs.

Our 21 branches across London and 14 international offices are well-equipped to help local and overseas buyers, sellers, and landlords make the most of London’s attractive property markets. Get in touch with us to learn more.