It’s hard to believe that it is already time for our annual reflection on the past 12 months, and forward look into what 2025 might bring.
Despite the challenges of a fluctuating market, there’s much to celebrate – from the first base rate cuts in four years and inflation finally returning to target (albeit with some fluctuation), to a drop in mortgage rates that positively impacted demand. This demand, which notably accelerated in the autumn, continues to build momentum.
On the political front, we saw a change in government, which has brought its own set of challenges and opportunities.
Amid these developments, Living in London has not only weathered the storm, but thankfully thrived.
We took on a record number of sales properties which in turn lead to us achieving a record number of sales which were agreed periodically throughout the year, despite the political and economic fluctuations.
Additionally, we are once again very honoured and proud to have won several industry accolades, including being crowned Independent Estate Agents of the Year 2024, Best Real Estate Business of the Year 2025, Best Independent Lettings Agency 2024.
As we look to 2025, we endeavour to work as tirelessly again so to offer all of our clients a service of which we are proud.
The Sales Market
When reflecting on the sales market for 2023, we described it as “resilient”—a market that weathered the challenges of the mini-budget and subsequent economic turbulence. This resilience persisted throughout 2024.
Interest rate cuts, initially anticipated for early 2024, were delayed until August, when the base rate was reduced to 5%. Even before this, mortgage rates had begun to decline, leading to increased confidence and activity in the market. By early autumn, demand had fully translated into action, with reports of rising buyer interest and completed transactions.
The Royal Institution of Chartered Surveyors (RICS) September 2024 survey highlighted this surge, reporting a 14% increase in buyer demand—the third consecutive month of growth—and a 5% uptick in sales sentiment. HMRC’s October property transaction data showed a 10% year-on-year increase in UK residential transactions for August 2024, underscoring the market’s positive trajectory.
The budget announcement in late October brought some surprises, and whilst the fear of capital gains tax increases were unfounded, unexpected stamp duty changes caused a stir. Landlords were particularly affected by the immediate changes to thresholds, and other buyers are (and will be) now rushing to complete transactions before the new rules take effect. This flurry of activity promises a hectic start to 2025.
A second base rate cut followed on November 7, accompanied by cautionary notes about the pace and depth of future reductions. Despite initial market jitters, Bank of England Governor Andrew Bailey’s reassurance that four further cuts are likely in 2025 helped restore some confidence.
House prices and market demand have continued to strengthen through December, setting the stage for a positive outlook in 2025. Nationwide’s recent research predicts house price growth of 2-4% in 2025, with a surge in transactions expected in the first quarter as buyers race to beat the stamp duty deadline.
The Lettings Market
For landlords, 2024 was another challenging year, and 2025 promises further hurdles as the Labour government introduces additional reforms.
Many landlords exited the market in 2023 due to the Renters (Reform) Bill, and the return of the proposed abolition of Section 21 in 2024, as part of Labour’s election manifesto, has added further pressure. Now encompassed within the Renters Rights Bill, these changes include stricter Energy Performance Certificate (EPC) requirements, with the minimum grade being raised to “C” by 2030. A new consultation, launched in December, aims to strengthen these regulations, with results expected in early 2025.
The ongoing exodus of landlords has exacerbated supply shortages, driving rent prices higher. According to the ONS, average UK private rents rose by 8.7% in the 12 months to October 2024. Meanwhile, demand remains robust. RICS’ October Residential Survey reported a net balance of +19% of respondents observing increased tenant demand over the preceding three months. However, the November survey showed a slight decline in tenant demand for the first time since 2020 (-1%), while landlord instructions continued to fall (-13%). Looking ahead, 29% of respondents expect rents to rise further in the near term.
Looking Ahead
As we approach 2025, we anticipate a strong start to the year with buyers eager to agree and complete transactions before the March 31 stamp duty deadline. While we expect a slight dip in activity leading up to and immediately following the deadline, the market should rebound in late spring and continue growing into the summer. Stable interest rates and potential further cuts will support this steady growth, although uncertainties remain following the latest budget.
The Canada Water Masterplan continues to be a significant driver of regeneration in SE16. Milestones such as the opening of the dock bridge and the upcoming opening of ‘The Founding’ (the first building to be handed over) highlight the area’s transformation. This ambitious project is expected to sustain interest and positively influence demand in the area and local property values throughout the year.
In Conclusion
While 2024 presented its share of challenges, the market is far healthier than it was in 2023. Inflation and interest rates are now under control, and further reductions in mortgage rates are expected to enhance affordability. This improved environment will encourage more buyers and sellers to enter the market.
At Living in London, we already have many new property instructions ready to come to the market in the new year, as well as many pre-qualified buyers waiting and ready for the right opportunity/home.
Uncertainties remain, particularly concerning the Renters Rights Bill, but as always, we’re here to help our clients navigate these changes.
Whether you’re looking to buy, sell, rent, or let, or simply need professional advice from a 5-star rated, multi-award-winning agency, we’re ready to assist.
Contact us on 0207 231 0002 or email us at welcome@living-london.net to discuss your plans and discover how we can help you achieve your property goals in 2025.
020 7231 0002
welcome@living-london.net
