Navigating the Housing Market: My predictions for 2025

Phillip Gill, Managing Director, PLG Consultants

Economically, 2024 was, at best, mixed for many and dull for others.

In a world flooded with reports and information, it can be challenging to make an informed assessment of the current landscape.

Savills’ report from November 2024 captures this sentiment perfectly:

The oft-quoted Winston Churchill once said, “Politics is the ability to foretell what is going to happen tomorrow, next week, next month and next year. And to have the ability afterwards to explain why it didn’t happen.”  Much the same could be said of the dark art of house price forecasting.

We aren’t fortune tellers and we certainly don’t always get it right!

So, which direction is the housing market heading in 2025? In late 2023 and early 2024, predictions varied widely – some suggested a potential decline of 5%, while others anticipated a similar increase. Clearly, not very helpful!

For years, we’ve emphasised that stability and confidence are the lifeblood of the housing market, and that remains unchanged. However, we now face circumstances not seen since before the COVID-19 pandemic, possibly dating back to the “Brexit” referendum in 2016. Whether you agree with it or not, Brexit is now behind us and it’s time to look forward. With new governments in place on both sides of the Atlantic, it seems unlikely there will be any significant changes – regardless of your political persuasion – barring an unforeseen disaster.

The era of unprecedented low interest rates is now confined to history. While there’s talk of a desire for the base rate to drop from its current level of 4.75%, anticipated inflation from Labour’s first budget since 2010 suggests that any steady reduction may take longer than expected.

Savills’ five-year forecast for house price growth has increased slightly from 17.9% to 21.6%

suggesting a more optimistic outlook for the housing market despite ongoing economic uncertainties. With borrowing costs stabilising and modest increases in house prices, it appears that stability may finally be on the horizon for the housing market.

After more than five years of uncertainty, many “would like to” home movers are more likely to take the leap, potentially increasing available housing stock. This is a positive development for our clients: a wider selection of homes to rent or purchase increases the chances of finding the right fit rather than settling for the best of a bad bunch. 

Time will tell how things evolve – but there’s hope that conditions may be shifting in favour of clients with disabilities who urgently need new accommodation solutions.

Phill

PLG Consultants, 7 January 2025

Reference

Savills UK. (2024). Revised Mainstream House Price Forecasts: 2024–2028. 

Available at: https://www.savills.co.uk/research_articles/229130/359399-0

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