Matthew Henderson
Associate Director, Residential Research
Strutt & Parker anticipates that the housing market will see a continuation of the boost in transactions that occurred across the latter half of 2024; Q4 saw more than 300,000 transactions for the first time since 2022.
The upward pressure on values with remain throughout 2025. Prime London a trickier market, the improving fundamental will assist sales and values but changes to the non-dom status hang over the market.
Matt Henderson, Associate Director in Research at Strutt & Parker comments “In the latter half of 2024 we saw more movement in the market, housing transactions topped 100,000 per month in Q4, as well as price growth of 3.6%.
This activity was driven by pent-up demand from the previous 18 months; those who were keen to move home but financially unable to due to high and unstable debt costs. 2024 provided lower, and more stable, mortgage rates, as well as a more positive sentiment, which allowed this demand to be released, this will only improve throughout 2025.
Further to this a positive market, with increasing values, creates a snowball effect. Buyers enter the market, creating demand and this pushes up prices, which in turn make the market look more positive and attracts more people to enter. If house prices are flat, or falling, there is no incentive to enter the market, positive price growth acts as an incentive to act in the housing market sooner rather than later. This momentum has started and will continue to build through the year.”
Prime Central London transactions stayed flat in the £1m+ market against Q3, including sales under £1m the market grew 8%; typically, seasonality means Q4 is weaker than Q3. PCL prices fell -2% over 2024, continuing the trend of broadly stagnant sales values which peaked a decade ago in 2014. Agent’s report post the Autumn Budget and US Election sentiment feels more positive, although still more difficult than normal. The recent fall in the value of the pound is likely to be the major diver of the market; there are not many national buyers coming in at the top end, and whilst there have been some Americans transacting at high prices, further foreign money attracted by the advantageous exchange rate is required.
James Gow, Head of London Agency at Strutt & Parker adds “Q4 was very busy in our sales market driven by increased confidence in the market and healthy demand from buyers who were keen to secure a home before the year end. We expect this trend to continue in 2025, with lower borrowing costs expected as the base rate will be cut further, as well as an improving economic outlook. This is coupled with some global uncertainty that makes the UK, and London in particular, more attractive.”
Rents in PCL grew by 0.4% in 2024, towards the lower end of our forecast range. It was a year of two halves; the first half of 2024 saw rental growth with the second half of 2024 seeing rents come in by -0.5%. This reduced rental growth has helped to spur on new lets across PCL which peaked in Q3 before falling away, as is typical, in Q4.
Across the year 2024 saw 8% more new lets than 2023, this was more heavily weighted towards flats which now make up 91% of the market, house new lets fell 6%.
Deputy Head of Strutt & Parker Agency, Kate Eales concludes “The start of 2025 has been very encouraging, particularly in terms of the activity around stock being bought to market. January has seen potential vendors bringing properties to the market, particularly at the £1m plus end, which traditionally gathers pace in the Spring but seems to have jumped into action earlier this year. The number of potential buyers seems slower to catch up although we are seeing more new buyers as these properties are launched.
Those buyers that are in the market look to be highly motivated, realistic, and looking to transact; although our applicant – potential buyer – numbers are slightly down our offer numbers are up. As rates continue to come down and the market picks up more momentum, we expect the number of buyers to increase, it is very promising to have this ratio of buyers to offers.
The willing to act from the buyers in the market will help keep prices firm, and we expect values to increase over the year as additional buyers come to the market.”
Read the full report here.