posted 4th February 2025
After boosting activity in the first three months of the year, stamp duty changes could dampen buyer demand from April. The tax-free threshold is due to drop from £250,000 to £125,000, and from £425,000 to £300,000 for first-time buyers.
The other thing to watch is interest rates. Further cuts are expected in 2025 but could come at a slower pace than previously forecast thanks to rising energy prices, tax changes announced in the Autumn Budget, and tariffs from US president Donald Trump.
If inflation stays higher for longer, interest rates probably will too.
In light of recent developments, real estate consultancy Knight Frank has downgraded its forecasts for house price growth, but still expects prices to rise by 2.5% in 2025, 3% in 2026 and 3.5% in 2027. This is down from estimates of 3%, 4% and 5% previously.
Meanwhile, estate agent Savills has predicted that house prices will rise by 4% across the UK in 2025. It does not expect this growth to be spread evenly, though.
Top-end properties in London are likely to experience a 4% drop in value, the agency said, as investors are hit by extra stamp duty charges and changes to non-dom rules.
Finally, on a regional basis, we could see a continuation of the north-south divide when it comes to house price growth.
Savills expects house prices to increase by 5.0% in 2025 in the North West, the North East, Scotland, and Yorkshire and the Humber. Meanwhile, prices in the East of England and the South West are forecast to increase just 2.5% during the year.
(Data source: Money Week. January 2025).
