UK housing market Q1 2025: strong growth despite economic pressures

The UK property market continues to show remarkable resilience in Q1 2025, with house prices rising and buyer demand increasing despite economic challenges.

Homeowners considering selling will find encouraging signs across most regions, with sales up nearly 10% year-on-year. Recently, Homeward Legal discussed the surprisingly buoyant housing market despite financial pressures affecting mortgage rates.

This is confirmed by housing market specialists TwentyCi in their latest report comparing Q1 2025 with Q1 2024, with detailed insights available for download here. Their analysis shows all key UK property market indicators have significantly increased compared to last year.

The report highlights several important trends for homebuyers and sellers:

• Sales agreed - Up nearly 10% year-on-year, with growth noted across all UK regions except Northern Ireland. Some 326,000 sales have been agreed nationwide.
  
• Property supply - The number of properties with instructions to sell increased by 3.7% compared to Q1 2024. Consistently, around 425,000 new properties are coming to market each quarter - close to what experts consider "normal" for a buoyant housing market.
  
• Contract exchanges - Up 25% compared to Q1 2024, though this figure was influenced by the removal of the first-time buyer reduction that ended in March, which has skewed this particular statistic.
  
• Regional variations - South-East England continues to face challenges in property sales, though inner London areas are performing better with stronger buyer demand.
  
• Demographic shifts - 42% of those moving in Q1 2025 are in "older life stages," up from 37% in the same period last year
• Rental availability - Available rental properties have dropped by 16% year-on-year, creating a tighter rental market.

This data suggests that, apart from a few small pockets of reduced activity, now is a strong time to consider selling your property. With increased buyer activity and strong demand, sellers may find themselves in an advantageous position.

The market turnover rate means properties are moving quickly. For homeowners considering selling, these conditions present a favorable opportunity with a wide pool of potential buyers.

For buyers, the increased supply of properties provides more options to choose from. However, with the market moving quickly, decisive action is important. If you find a property you've set your heart on, you'll need to:

1. Make decisions quickly
2. Be prepared to negotiate asking prices more robustly than this time last year
3. Have your financing arrangements in place
4. Work with experienced conveyancing solicitors to expedite the process

"In Q1 2025, the UK property market saw the highest number of new listings in seven years, with strong demand driving a 9.3% increase in sales compared to Q1 2024. Detached houses were particularly sought after, while the average time to achieve a sale and to exchange both increased. Rental stock availability dropped by 16% year on year.

In general, there are reasons for optimism but the key questions ahead are what will be the impact of global trade on the UK economy and moreover the impact on employment futures and how mortgage lenders react in terms of lending policy.

Frankly, I have no idea, but with interest rates forecast to fall I suspect cautious optimism will serve us well."

Colin Bradshaw, Chief Executive Officer at TwentyCi

Stamp Duty change influence on the housing market

Robert Gardner, Nationwide's Chief Economist, commented in an article about the UK housing market outlook for 2025that the Stamp duty rates update on April 1st 2025 will be followed by “a corresponding period of weakness in the following months, as occurred in the wake of previous stamp duty changes”.

Property specialist Colleen Babcock from Rightmove notes after seeing a record number of sellers in Q1 2025 that successful sellers in the current market are collaborating closely with their agents to set competitive prices and showcase their properties optimally, indicating the market may currently favor buyers.

With the new stamp duty rates, households will now have to pay an average extra of £2500 when buying a property.

Tradewars and potential consequences on interest rates

UK interest rates (currently at 4.5%) are expected to be cut more aggressively than previously forecast due to Trump's new tariffs, with economists now predicting four 0.25 percentage point cuts by next year, bringing rates to around 3.5%. 

As Bank of England governor Andrew Bailey notes, "it is the Bank's job to make sure that inflation stays low and stable, but the Bank faces a difficult balancing act  if tariffs fuel inflation, rates might stay higher, but if business confidence suffers due to trade uncertainty, the Bank might feel compelled to act to boost sentiment with steeper rate cuts to stimulate economic activity."

Whatever your property purchase or sale plans, ensuring the legal side of the transaction is swift and trouble-free is crucial. Homeward Legal's conveyancing solicitors focus on your needs with a drive to complete your transaction as quickly as possible.

Our conveyancing promise

• Immediate action - Our conveyancers start work as soon as you appoint them
• Transparent pricing - What you are quoted is what you pay for standard conveyancing processes - No hidden fees or unexpected costs
• Protection guarantee - Our 'no completion, no fee' promise ensures that if your purchase or sale doesn't complete, no payment is required

Call to get your conveyancing quote started, or to discuss your plans to move.

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