Average asking prices will rise by 4% over the course of next year, but it will be a buyer’s market, according to forecasts by Rightmove.
The property listing website predicts there will be four base rate cuts in 2025 bringing both two and five-year fixed rates down to an average of around 4% by the end of the year.
Currently average five-year rates are around 4.83% and two-year rates around 5.08% and Rightmove sees this gap closing, which will boost the popularity of shorter-term deals once again.
Two-year fixed rates have been more expensive over the last couple of years, but the gap is currently the smallest it has been all year.
There may be room for rates to come down a bit more in 2026, but we will not see a return to the historically low rates seen prior to the cost-of-living crisis.
Rightmove says during Covid and its aftermath there were larger increases in house prices, partly due to demand outstripping supply.
The average number of available homes per estate agent branch is at its highest level in a decade for this time of year, which means buyers are often “spoilt for choice”.
Rightmove expects this will continue next year, creating competition among sellers and constraining house price growth.
But it says this imbalance will help ensure a higher number of sales complete and it forecasts 1.15 million transactions for the year as a whole.
Rightmove’s property expert Tim Bannister says: “Stamp duty charges rising from April 1 means we are likely to see a particularly busy first three months of the year as first-time buyers, home-movers and investors all try to complete on planned purchases and avoid higher charges.
“The effects of stamp duty rising will be felt for the rest of the year too, and we may see some negotiation tactics play out, particularly on properties close to the £300,000 mark, as both buyers and sellers try to mitigate their higher costs through the price agreed.”
Rightmove’s mortgage expert Matt Smith adds: “It is likely to be a mixed year for the market.
“Those who took out peak-mortgage rate two-year fixes after the mini-Budget will see their deal come to an end and will likely find themselves with lower costs next year.
“Combined with wage growth, they may feel some significant affordability improvements.
“By contrast, many movers will be rolling off a relatively low five-year fixed rate agreed during the busy market of 2020 and will see costs rise.
“With remortgaging and product transfers set to be an important theme for lenders next year, we’ve launched a remortgage rate tracker to show the latest trends in this sector and monitor lender behaviour next year.”