"It’s important to look at the bigger market picture, despite the positive early lead indicators that we’re seeing. "
- Colleen Babcock, property expert at Rightmove
The average price of property coming to the market for sale has risen by 1.7% this month, the largest monthly jump in prices at the start of the year since 2020, according to the latest Rightmove figures.
Average asking prices are still £8,942 below May 2024’s peak, reflecting buyer affordability constraints. However, with a record number of early-bird new sellers coming to market from Boxing Day and into January, there seems to be pent-up demand to move.
The number of new properties coming to market is 11% ahead of the same period at the start of last year, while the average number of homes for sale per estate agency branch is currently at the highest for this time of year in 10 years.
High buyer choice has contributed to increases in buyer enquiries and sales agreed compared to a year ago, but also means fierce seller competition to attract these new year buyers. Rightmove says some sellers may find that they have been too optimistic on their initial pricing and get left on the shelf in favour of more competitively priced neighbours.
Since Boxing Day, the number of buyers contacting estate agents about homes for sale is up by 9% on the same period last year. The combination of good choice and healthy buyer demand has kept the sales trend positive, with the number of sales being agreed between buyers and sellers now 11% ahead of this time last year. Rightmove has also recorded its busiest start to a year for prospective home-movers applying for a Mortgage in Principle.
All of these very early lead indicators at the start of this year point to a busier 2025, with Rightmove forecasting a larger number of transactions this year of 1.15 million, and an average asking price increase of 4%.
However, despite many positive activity metrics when compared with last year, there are uncertainties ahead, including the pace and number of future interest rate drops and the impact of increased stamp duty for many home-movers from 1st April. One market sector that Rightmove anticipates will be particularly affected is the smaller-homes, typical first-time-buyer sector. Since Boxing Day, the number of enquirers in this sector is up by 8%, the lowest increase of all market sectors. First-time buyers in cheaper parts of England will largely be unaffected. However, stamp duty charges rising for those buying above £300,000 will be a drag on the important bottom-of-the-ladder market in more expensive areas, unless some additional help for first-time buyers is announced soon.
Mortgage rates remain at unexpectedly high levels, which means that many buyers are not seeing significant affordability improvements. Rightmove’s weekly mortgage tracker shows that the average five-year fixed mortgage rate is now 4.75% compared with 4.78% at this time last year. While the average two-year fixed mortgage rate has improved, it is still 4.97%, down only slightly on last year’s 5.08%. There have been changing messages on how many Bank Rate cuts to expect this year, which are causing some uncertainty and will prevent some potential buyers from joining in the new year enthusiasm.
Colleen Babcock, property expert at Rightmove, commented: “New sellers have started the year with a bang, with a record number coming to market not only on Boxing Day itself, but across the start of the year to date. We’ve also seen a strong start to the year in new seller asking prices, though given the higher-than-anticipated seller competition, we would expect this to slow down over the next few months. The record number of sellers we’re seeing is a double-edged sword. It’s encouraging to see so many sellers with the confidence to come to market, providing buyers with fresh choice. However, with lots of homes for buyers to consider, sellers will need to work even harder to stand out from the crowd and attract a buyer. This could be with a tempting asking price, standout home features, immaculate presentation of the home, or a combination of all of these. It’s vital that in a competitive market, sellers take on the recommendations of their agent, particularly when it comes to setting a realistic price.
“It’s important to look at the bigger market picture, despite the positive early lead indicators that we’re seeing. 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. Rightmove’s 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.”
Matt Smith, mortgage expert at Rightmove, added: “The message around how many Bank Rate cuts we should expect this year keeps changing, creating some uncertainty for movers. 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.”
