We expect positive price growth this year – in a climate of falling mortgage rates, improving affordability and the release of some pent-up demand. Rightmove reported that first-time buyer demand in the capital in September 2024 was 28% ahead of 2023, moving up to 31% after the autumn budget. In light of this, Rightmove is predicting that UK asking prices will increase by 4% in 2025, its highest forecast for price increases since 2021. Indeed, the first quarter of the year is likely to be very busy as first-time buyers race to complete their transactions to take advantage of current stamp duty benefits until April.

"Rightmove is predicting that UK asking prices will increase by 4% in 2025, its highest forecast for price increases since 2021"

Parents in London are now looking to move to areas with good state schools following the government’s adding 20% VAT onto the cost of private schools in the UK. We expect to see prices in London neighbourhoods known for their excellent state and grammar schools to increase this year. This includes many of our investment areas such as Richmond, Kensington & Chelsea, Chiswick and Battersea. Stuart Cheetham of MPowered Mortgages is forecasting up to 10% price growth in “in some localised hotspots including popular family housing areas where there is access to good schools. In these areas there is strong demand and limited supply.” He also commented that “a growing shortage of property and rising demand… will mean London house prices will do well in 2025”.

We also expect to see a continued unwinding of the pandemic-driven ‘race for space’ in which buyers turned their attention from urban centres to rural and coastal areas. From April, local authorities will have carte blanche to implement a 100% council tax surcharge on second homes, meaning that popular rural and coastal holiday hotspots may become less popular. And as more and more companies are insisting on higher rates of office attendance, there is now additional pressure on buyers to keep their money in a single London property. Nicky Stevenson, Managing Director of estate agency Fine & Country, said: “if we see more businesses expecting their employees to return to the office five days a week in 2025, we could see a renewed interest in the capital’s property market and prices to respond accordingly.”