UK Property Prices Drop as Market Faces Continued Headwinds for 2025

Post by: Pratik Kumar

The average asking prices for homes in the UK dropped by 1.7% in December, according to a report by property website Rightmove. This is the latest sign of change in the housing market, even though activity stayed active for this time of year. Many buyers are rushing to buy homes before property taxes go up in April 2024.

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Rightmove explained that their figures are not adjusted for seasonal changes, and this latest fall follows a 1.4% drop in November. They noted that these changes match the usual pattern of price declines at the end of each year.

Compared to last year, the asking prices are still 1.4% higher, showing some growth despite the economic uncertainty. The data analyzed was from November 10 to December 7.

Homebuyer Demand Stays Positive Despite Rising Costs
The number of home sales agreed upon was 22% higher than in the same period last year. Additionally, demand from new buyers grew by 13%. Experts believe this shows that buyers are still eager to make purchases despite changes in tax rates and economic worries.

Stamp Duty Changes May Affect Buyers in 2024
Tim Bannister, Rightmove’s director of property science, said the recent changes to stamp duty tax will have a big impact. Starting April 1, 2024, first-time buyers in England will pay stamp duty for homes costing £300,000 or more, down from £425,000. Other buyers will pay tax on purchases at £125,000, and second home buyers will face additional costs.

Bannister pointed out that these tax changes are creating uncertainty for many buyers. He said a cut in mortgage rates or a reduction in the Bank Rate could bring back confidence to the market.

The Bank of England is expected to keep its interest rate steady at 4.75% but could lower rates later this year. Financial experts are predicting that there could be three rate cuts through 2024.

Government Plans to Speed Up New Homebuilding
UK Prime Minister Keir Starmer’s Labour government, which began in July 2023, has introduced plans to reform the planning system. This effort aims to make it easier to build more homes and support economic growth.

While the UK housing market faces challenges like tax increases and mortgage rates, buyers and investors are keeping an eye on these changes for opportunities. Many believe that reducing costs and mortgage rates will make housing more affordable again.

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