UK Housing Market 2024: A Year in Review

With the arrival of 2025, the UK housing market remains a mixed bag, defined by slower house price growth, surging rents and pronounced regional differences.

Below, we take a look back at 2024’s key trends and a peek into what the new year holds…

What’s the big picture?

House prices

After years of rapid increases, house price growth slowed significantly in 2024. According to the UK House Price Index, the annual growth rate was approximately 3.8% by September. This was driven by high borrowing costs as mortgage interest rates stayed above 5% for much of the year. Buyers in regions like London and the South East were particularly cautious, with some areas even seeing price declines.

In contrast, more affordable regions like the Midlands and the North continued to show resilience, supported by a growing number of first-time buyers and infrastructure investments.

Rental market

The rental sector saw the sharpest price increases in years, with the Office for National Statistics (ONS) reporting an 8.7% rise in average rents by October.
London led the charge with over 10% growth, reflecting a supply shortage as many landlords exited the market due to new regulations like the Renters’ Rights Bill. The Midlands and Wales also saw steady increases, although not as extreme.

Transactions and new builds

The number of property transactions fell sharply in 2024, according to HM Land Registry, as many buyers paused their plans in the face of economic uncertainty.
New housing supply has also been constrained, with completions falling short of government targets, leaving affordability challenges unaddressed.

2025 Housing Market

Mortgage rates

Many analysts, including Zoopla and Rightmove, predict this year could bring some relief to buyers as inflation begins to ease! If the Bank of England lowers interest rates, mortgage rates may follow, potentially stimulating more activity in the market.

House prices

The market is expected to remain subdued but stable in the short term. Zoopla suggests house prices could see modest growth of 2-3% in 2025, with affordability remaining a critical factor.
Regions with strong affordability and infrastructure improvements (like Manchester, Birmingham and parts of Scotland) may continue to outperform pricier areas.

Rentals

The rental market is unlikely to cool down in the near term. Demand remains strong, particularly in urban centres, and rental supply is still constrained. Renters can expect continued competition and rising costs into 2025 unless significant new rental housing is built.

Legislation and supply

Government policies aimed at boosting new builds, such as reforming planning processes, could start to bear fruit in late 2025. However, the impact on supply and affordability is likely to take years to materialise…

What should you do?

Buyers: Keep an eye on interest rate trends. The spring of 2025 could be a good time to jump in as rates stabilise and competition remains manageable.
Sellers: Realistic pricing will be key, especially in slower markets. Focus on making your property stand out in regions where growth is lagging.
Renters: Be prepared for continued rent hikes, particularly in high-demand cities. Explore suburban or regional areas for more options.