The average price of a new home dropped by more than £5,000 in November, as reported by a property website. The typical asking price for a home entering the market in the UK is now £366,592, which is 1.4% lower than the previous month, a decrease of £5,366, according to Rightmove. This decline is higher than the usual 0.8% drop seen at this time of year, making it the second consecutive month with weaker price growth than usual, the website stated. In October, prices only increased by 0.3%, lower than the typical 1.3% rise for that month. Rightmove is anticipating a 4% increase in asking prices for the year 2025, but it warned that the market is sensitive to prices, with seller competition at its highest level in ten years.
Despite expectations of more mortgage rate cuts in 2025, the Bank of England base rate cuts are predicted to be slower-paced, according to Rightmove. Tim Bannister, Director of Property Science at Rightmove, mentioned that the overall market activity remains positive compared to the previous year. He stated, “This sets us up for what we predict will be a stronger 2025 in both prices and number of homes sold, particularly if mortgage rates fall by enough to significantly improve affordability for more of the mass market.”
Following the autumn Budget, there was a drop in buyers contacting estate agents about homes for sale, but a recent Bank of England base rate cut led to a rise in buyer demand, as per Rightmove’s data. However, the website still expects a seasonal slowdown in home-moving activity leading up to Christmas. Mr. Bannister added that they are predicting a stronger year for prices in 2025, with market momentum expected to continue into the next year. He mentioned that the speed at which mortgage rates decrease will play a crucial role in determining activity levels in the market.
Additionally, the report included insights from estate agents. Kevin Shaw, National Sales Managing Director at Leaders Romans Group, expressed that the market is currently in an interesting phase, with expectations of improved market sentiment in 2025. Alastair Cochrane, Group Sales and Operations Director at Stirling Ackroyd, highlighted that overall yields have increased with rising rents, providing investors with some comfort despite stamp duty increases. Alex Caddy, Manager at Clarkes Estate and Letting Agency, mentioned that there are two groups of sellers currently – those who are holding firm with their asking prices and those who are willing to reduce prices to attract buyers more quickly.
There is optimism among sellers that as first-time buyer activity increases, it will have a positive impact on the market in the coming year. The market is expected to see some twists and turns in 2025, with sellers needing to price their properties attractively to secure buyers amidst high competition in the market.
