UK Property Market: End-of-Year 2024 Report and what to expect in 2025

I hope you are well and wish you a merry Christmas and a happy new year.

I have reviewed the latest reports, and here are my latest insights from key market indices and expert analyses, offering a quick summary of the current UK property landscape and the opportunities ahead in 2025.

Sources include the HomeTrack House Price Index, UK Rental Market Report, Zoopla, Rightmove, and the Savills Market Forecast.

House Price Trends

2024 Performance Highlights

• Annual Growth: UK house prices grew by +1.5% year-on-year to October 2024, recovering from a -1.2% decline in 2023.
• Regional Leaders: Northern Ireland (+6.3%) and the North West (+2.9%) led growth, with London and the South East experiencing growth below 1% due to affordability constraints.

2025 Projections

• National Growth: House prices are forecast to rise by +2.5% in 2025, supported by rising incomes and stable mortgage rates.
• Five-Year Growth: Savills projects a +23.4% cumulative house price increase by 2029, with the North West expected to lead at +29.4%.
• Transaction Volume: Sales activity is set to increase by +5% in 2025, reaching 1.15 million transactions.

Rental Market Performance

2024 Key Metrics

• Annual Rental Inflation: UK rents increased by +3.9%, the lowest rate in three years. However, demand remains 31% higher than pre-pandemic levels.
• Regional Variations: Northern Ireland (+10.5%) and the North East (+8.7%) showed the strongest rental growth. In contrast, London saw a modest increase of just +1.3%.

2025 Market Outlook

• Projected Rental Growth: Average rents are expected to rise by +4%, with stronger growth in more affordable regions.
• Supply Challenges: While rental stock has increased by 12% compared to 2023, it remains 18% below pre-pandemic levels, sustaining upward pressure on rents.

Yields by Region

• The highest rental yields were recorded in the North East (8.02%) and Wales (7.95%), while London lagged at 5.52%.

Economic and Policy Context

Interest Rates

• The Bank of England reduced the base rate to 4.75%, with further cuts anticipated in 2025. This move has eased borrowing costs and bolstered buyer confidence.

Inflation and Income Growth

• Inflation is forecast to peak at 2.6% in 2025 before gradually declining. Meanwhile, household disposable incomes have risen by 15% over two years, improving affordability.

Policy Impacts

• The reintroduction of higher stamp duty rates in April 2025 will primarily impact properties priced between ￡125,000 and ￡250,000, slowing growth in this segment.

Opportunities for Investors

Regional Investments

• The North West, Yorkshire & Humber, and Northern Ireland are poised for the highest returns, driven by affordability and demand. These regions offer significant growth potential and rental yields exceeding 8%.

Rental Market Stability

• Robust tenant demand, coupled with constrained supply, ensures stable rental income streams. Affordable areas and secondary cities will see the strongest growth.

Focus on Affordability

• Regions where prices and rents align with local incomes present lucrative opportunities, particularly as affordability challenges limit growth in high-cost areas like London and the South East.

Key Data Snapshots for 2024

• Average House Price: ￡267,200, with the highest growth in Northern Ireland (+6.3%).
• Average Monthly Rent: ￡1,270, with the North East achieving the highest rental yield (8.7%).
• Transaction Activity: Sales volumes increased by 19% year-on-year, driven by strong buyer confidence.

Let’s Shape Your 2025 Investment Strategy

The UK property market’s resilience and adaptability offer exciting prospects for 2025. At Fabrik Invest, we specialize in identifying fully managed property investments that maximize returns and minimize risks.

Contact us today to discuss tailored solutions that align with your financial goals.

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