UK Housing Market Sees Strong Start to New Year, According to Latest Data

The UK housing market has kicked off the new year with a bang, according to property website Rightmove. The average price of properties coming to market rose by 1.7%, the largest increase at the start of the year since 2020.

Record Number of New Sellers Enters Market

A record number of new sellers have entered the UK housing market since Boxing Day, while the average price and the number of sales agreed also increased. This points to a busier 2025, with buyers becoming more comfortable bidding for homes in response to falling interest rates.

Interest Rates and Stamp Duty Uncertainties Ahead

While prices usually bounce back in the new year after a seasonal fall in December, this month’s rise was pronounced. However, there are uncertainties ahead, including the pace and number of interest rate cuts from the Bank of England and changes to stamp duty from 1 April.

Impact on First-Time Buyers

First-time buyers in cheaper parts of England will largely be unaffected by a fall in the tax-free threshold to £300,000 from April. However, stamp duty charges rising for those buying above the threshold will be a drag in more expensive areas, unless some additional help for first-time buyers is announced soon.

Mortgage Rates Remain High

Mortgage rates have remained relatively high, with fixed-rate deals below 4% all but disappearing in recent months. Rightmove‘s weekly mortgager tracker shows that the average five-year fixed mortgage rate is now 4.75%, little changed from 4.78% this time last year.

Interest Rate Expectations Shift

The surprise drop in UK inflation in December and meagre economic growth in November have shifted interest rate expectations. Financial markets are now pricing in two or three quarter-point cuts this year, which could lead to a larger number of transactions and an average asking price increase of 4%.

However, the impact of higher borrowing costs on mortgages is expected to come under pressure in coming months, and what happens on bond markets will have a fairly direct bearing on UK house prices this year.

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