Why have house prices risen this month?
With festive decorations packed away and normal life resuming, it seems that lots of people’s thoughts are turning towards what a 2025 move could look like for them. Rightmove’s first House Price Index of the year shows that the national average house price has risen by 1.7% this month, to £366,189. This is what they had to say about that.
“Since recording our busiest ever Boxing Day for traffic and new listings, we’ve seen 11% more sellers come to market than at this time last year. This means buyers who’re starting their home search now will find the greatest amount of choice at the start of a year since 2015.
We’ve seen a 9% annual increase in the number of buyers contacting agents about properties for sale, while the number of sales being agreed over the same period is also up by 11%.
What happened to house prices this month?
This new year jump in house prices is the largest increase we’ve seen at the start of the year since 2020, and we’ve also recorded the busiest start to a year for Mortgage in Principle applications. Showing that lots of people coming into the new year are considering how much they might be able to afford when applying for a mortgage.
While an increase in buyer choice has led to more enquiries and sales agreed, it also means that there is growing competition amongst sellers looking to find a buyer. So, we could see some sellers find that they’ve have been overly optimistic on pricing when bringing their home to market and need to make a reduction further down the line.
It’s also worth considering that average asking prices are still £8,942 below the peak we saw in May 2024 – a reflection of ongoing buyer affordability constraints.
What do the experts think?
It’s been a busy start to the year, and if the trend continues into these early few months of the year, we’re likely to be set up for a busy Spring moving season, which is typically the busiest time of year for the housing market.
However, despite the recent flurry of activity, some uncertainties remain on the horizon, such as what could happen to interest rates, and the impact of increased stamp duty for many home-movers from 1 April.
Our property expert, Colleen Babcock, says: “It’s important to look at the bigger market picture. Many buyers are still affordability-stretched, with high mortgage rates restricting borrowing power and limiting what they can afford to pay. Meanwhile, first-time buyers have seen support schemes reduce and some also face higher stamp duty fees from April, all while contending with record rents and trying to save up for a deposit.
“Our early-year snapshot shows a promising start to 2025. However, the market needs a boost for that momentum to be sustained, in the form of early and ongoing Bank Rate cuts, which should hopefully help to reduce mortgage rates. Some further support for first-time buyers would also be welcomed, particularly in more expensive areas of the country.”
What could happen next?
Looking ahead, we anticipate that 2025 will remain a buyers’ market, owing to a greater choice of homes to choose from, and longer average times to find a buyer. You can read more about our experts’ predictions for the year in our 2025 housing market forecast.
In terms of the coming months, all eyes will be on the implications of the stamp duty deadline, and the Bank of England’s future decisions on interest rates. Our mortgage expert, Matt Smith, says:
“News of high government borrowing costs was swiftly followed by better-than expected inflation figures, highlighting how quickly the mood can change. The markets are still banking on a cut in February, but after that it becomes uncertain. I think we’ll need to get settled into the year a little more before the direction of travel for rates this year becomes clearer.”
Modified article taken in part from an article from: Rightmove
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Important Information
All property sales and the financial advice that surrounds them are as unique as the people engaging in the transaction. It is important to not decide without seeking professional advice. If you want to sell your home and are considering redecorating before marketing, speak to one of our Property Professionals to get the best advice for presenting your home for sale before making any investment. This article is for the purpose of information only and should not be seen as financial advice.