As we’re closing in on Christmas, UK house prices have just dropped by 1.8%, shaving £5,366 off the average asking price.
This sharper-than-usual seasonal dip follows post-budget disappointment. For first-time buyers, this could be a chance to step onto the property ladder at a discount. But with mortgage rate cuts slowing, will affordability improve fast enough to make a difference?
What Lies Ahead for the Housing Market
Rightmove predicts a 4% increase in new seller asking prices in 2025, despite current challenges. However, the market is expected to remain highly price-sensitive. Sellers are facing increased competition, with the number of homes for sale at its highest level in a decade. To secure buyers, sellers may need to continue offering competitive pricing.
Looking further ahead, other data suggests house prices will rise by 3% in 2025, 3.5% in 2026, and 2.7% in 2027. If these projections hold, the average house price could reach £300,000 next year, representing a £10,000 increase. Regional differences are also likely to emerge, with London expected to lead growth in 2025 with a predicted 4% rise.
Implications for First-Time Buyers
For first-time buyers, the current dip in property prices could provide a short-term opportunity to enter the market at a slightly lower cost. However, affordability remains a significant hurdle, as further improvements in mortgage rates might take longer than hoped.
If interest rate cuts proceed at a slower pace, first-time buyers could face delays in seeing meaningful financial relief. The market’s sensitivity to pricing and high competition among sellers may work in their favour, giving them more options and room for negotiation.
Conclusion
The UK housing market is at a turning point. While prices have dipped as we near the end of the year, long-term forecasts point to steady growth, particularly in London and other competitive regions. Buyers and sellers alike will need to stay alert to evolving mortgage rates and pricing trends as the market finds its footing in 2025.
Source: Yahoo Finance, Rightmove