UK property market rebound sparks optimism

13% more house-hunters actively searching for their next home

The UK property market is showing remarkable signs of recovery and has shook off the usual pre-Christmas slowdown. According to data from Rightmove, estate agents sold 22% more properties during the festive period than at the same time last year. These impressive figures confirm that the housing market has bounced back after nearly two years of stagnation.

Furthermore, there has been a surge in buyer interest, with 13% more house hunters actively searching for their next home.

Lower mortgage rates are fuelling the revival

Central to this renewed market activity are the more favourable mortgage rates currently on offer. With rates significantly lower than they were just a year ago, borrowing has become more accessible for prospective buyers. This has provided a vital boost to the property market, which faced considerable challenges after the mini-budget was introduced in Autumn 2022.

Signs of recovery began to emerge over the summer of 2023, and momentum has steadily built since then. Interestingly, the current market hustle and bustle has centred around smaller homes in higher-priced regions. Sellers in these segments have acted fast, with many hoping to complete transactions before stamp duty changes come into force in April 2025.

Surge in smaller property listings

Listings of “typical first-time buyer homes”, such as two-bedroom flats and small houses, have surged by 20% compared to the same period last year. Similarly, in the southeast of England—one of the UK’s priciest regions after London—there has been a 16% increase in listings of one- and two-bedroom properties. This trend highlights sellers’ urgency to act before the stamp duty reforms take effect.

From April 2025, the tax-free stamp duty threshold for first-time buyers will revert to £300,000, down from the current threshold of £425,000. While this change is expected to have a limited impact across most of the UK, its effects will likely be more pronounced in London, where typical first-time property prices hover around £480,000.

Stamp duty reforms cast a shadow over the market

Some experts have noted that the prospect of higher stamp duty serves as “a cloud over the market at the moment”. Nevertheless, the property market remains resilient, with asking prices forecasted to rise by 4% this year. This follows a smaller 1.4% increase in 2024, which brought the average property price to £360,197.

Expectations for early interest rate cuts and further falls in mortgage rates this year could help stabilise the market further. Such measures are likely to bolster buyer confidence and offer valuable support at a time of significant change.