Positive boost for the UK housing market with Bank of England interest rate cut 

2024 concluded incredibly well for the UK property market as buying and selling activity continued to grow through last year and into the start of 2025. According to Zoopla, a 30% increase in sales from last year means we now have the largest pipeline of sales for four years, which includes nearly 283,000 property sales worth £104bn.

Adding to this promising start for the property markets in 2025, the Bank of England recently announced another cut of 0.25% to its base rate, bringing the key rate down to 4.50%. This marks the third rate cut in the last six months, with the base rate at its lowest level since June 2023.

Positive trends amidst price-sensitive buyers

Despite the push in sales volume, supported by many new property launches last year, buyers are still very cautious, given the uncertainty surrounding the change in mortgage rates. However, the UK’s robust property market continues to show signs of growth, as Rightmove reported a 1.7% (+£5,992) increase in average property prices coming to the market in January. This price growth is the largest at the start of the year since 2020, marking the best market opening in the last five years.

Buyers feel the pressure of inflation

Homebuyers are feeling inflationary pressure on their finances, as the Office for National Statistics (ONS) reported a 2.5% annual inflation rate at the end of 2024. According to Zoopla, the average UK home is now worth £2,400 more than six months ago, as half the country’s housing stock of 30 million increased in value in 2024.

While Zoopla pegs current house price inflation in the UK at 1.9%, Rightmove expects a 4% housing price inflation by the end of 2025, with the total sale volume reaching 1.15 million. The changes to stamp duty thresholds from 1st April will only add to the affordability concerns of new homebuyers.

Growth indicators are upwards

Rightmove reported an 11% increase in the number of new properties coming to market in the first few weeks of January, signalling a busy year ahead. A 22% increase in the number of sales agreed upon and a 13% increase in the number of new buyers contacting estate agents about homes for sale are other early indicators of sustainable positive growth throughout the year.

Future rate cuts adding to market momentum

Rightmove also recorded its busiest start to a year for Mortgage in Principle applications. Many experts have already predicted that the Bank of England (BoE) will cut the base rate from 4.75% to 4.5% at its next meeting in February, easing the borrowing cost. With four base rut cuts anticipated through 2025, the central bank has already set an inflation target of 2% for the year, as per ONS reports.

Berkeley Capital Collection takes centre stage overseas

Many of our international offices across the APAC region showcased developments from the Berkeley Capital Collection, focusing on diverse buyer needs and investment strategies across exciting London neighbourhoods.

London property showcases in Malaysia

Our team in Kuala Lumpur had a busy January, showcasing completed apartments and penthouses in affluent areas like Notting Hill and brand-new schemes in investment hotspots such as Southall, West Ham and Hornsey.

Next, they will host an exciting property showcase of homes close to the iconic London Bridge, featuring sought-after Zone 1 and Zone 2 postcodes across areas like Southbank, Bermondsey and West Ham. This event will take place at the Majestic Hotel in Kuala Lumpur on the 22nd and 23rd of February.

Focus on TwelveTrees Park and Woodberry Down in Hong Kong

Our office in Hong Kong held a private consultation for overseas investors looking to benefit from London’s regeneration growth story. The focus was on TwelveTrees Park in West Ham, which is at the centre of a 22-year-long regeneration scheme.

The development’s on-site entrance to West Ham Station and its proximity to popular business and academic districts like Canary Wharf, The City and Stratford will ease residents’ commute by making five train lines accessible at once. In February, our team will host private consultations presenting investment opportunities in North London.

Consultations and showcases Indonesia and Singapore

Our team in Indonesia managed a successful showcase of two leading Berkeley developments in Jakarta this January. While Royal Arsenal Riverside in Woolwich was favoured for its on-site Elizabeth Line Station and scenic waterfront views of the Thames River, TwelveTrees Park made a solid impression with its masterplan vision to ease commute from West Ham and deliver yields of up to 6%. Our Singapore team will showcase these developments soon and hold private consultations with investors.

London property conclave in India

Our teams in Delhi and Mumbai are all set to host a property conclave featuring the finest Berkeley developments coupled with insightful one-on-one consultations with property experts. Our Managing Director, Anita Mehra, and our seasoned Director, Marc Von Grundherr, will also travel to India to meet with investors, share interesting market updates, and explain the benefits of investing in London properties.

Rents continue to grow steadily

While the advertised rents outside London grew by 5.2% annually in Q3 2024, Rightmove reported a slower growth for London, which increased by 2.5% during the same period. The average rent outside the capital is now £1,344 per calendar month, while London averages nearly £2,700 pcm. However, according to Zoopla’s report, average rents across the UK grew by 3.9%, the lowest recorded growth rate in the last three years.

Positive early signs for investors in 2025

Zoopla reported the average annual rent in the UK to have increased by 27% since 2021, while the average income has only grown by 19% in the same period. Although rents across London and the countryside are expected to grow at a more subdued rate this year of 2% and 3% respectively, landlords will still have an attractive market supported by a growing workforce and the influx of international students looking for quality rental accommodation.

Benham & Reeves has served local and overseas property buyers, sellers and landlords in London for over the last 65 years. With 21 branches across the UK capital and 14 international offices, we are your trusted partner for all your property needs. Get in touch with us to know more.