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UK estate agents expect house prices and property sales to rise in 2025 despite concerns over the impact of borrowing costs on mortgage holders, according to a closely watched survey released on Thursday.
The Royal Institution of Chartered Surveyors said a net balance of 37 per cent of respondents expected sales to increase in the year ahead, and that estate agents’ outlook was “solidly positive”.
The professional body’s survey measures the difference between the percentage of estate agents predicting rises and falls in home sales.
A net balance of 53 per cent of survey participants in December forecast a rise in house prices in the year ahead, with all parts of the country showing firmly positive house price expectations.
Simon Rubinsohn, Rics chief economist, said the survey pointed to “a further improvement in sentiment in the housing market despite concerns about the potential impact of rising bond yields on borrowing costs”.
The UK 10-year gilt yield rose in December and surged further this month as a global bond sell-off mixed with investor concern that the UK economy was entering a period of stagflation, in which sluggish growth is accompanied by persistent price pressures.
The yield fell on Wednesday after official data showed inflation slowed unexpectedly at the end of 2024. Yields move inversely to prices.
Quoted mortgage rates, which are affected by expectations for borrowing costs, increased for the second consecutive month in December, according to data tracked by the Bank of England.
The average two-year fixed rate with 60 per cent loan-to-value increased to 4.47 per cent in December from 4.39 per cent in November and 4.21 per cent in October. But it remained well below the 6.22 per cent registered in July 2023.
Rubinsohn said: “The resilience of the uplift in market mood could be tested if mortgage rates do begin to climb in a material way over the coming months.”
Higher mortgage rates would also be a concern for developers keen to see a solid market ahead of increasing housebuilding to help them meet the government’s target for 1.5mn homes this parliament, he added.
Estate agents also reported house prices gaining momentum in December, with Rics’ house price index rising to 28 from 24 in November, the fifth consecutive improvement.
The professional body’s measure for sales agreed also rose to 7 per cent in December from 1 per cent in November. It registered a negative reading for most of the past three years.
James Abbott, head of residential sales at the estate agency Savills in Stamford said “an uptick of sales being agreed” in the second half of December “may be a portent of early new year activity . . . perhaps with April’s stamp duty regime change motivating buyer action”.
In the October Budget, chancellor Rachel Reeves confirmed the end of a temporary stamp duty holiday. As a result, first-time buyers, for example, will from April start paying the levy for properties worth £300,000 or more, instead of £425,000 at present.
In the lettings market, the Rics survey reported weak demand, with a balance of minus 3. However, landlord instructions continued to fall with a net balance of minus 27 in December from minus 13 the previous month.
This imbalance between demand and supply continued to drive expectations of higher rental costs, with a net balance of 37 per cent of surveyors predicting rising rents in the next three months, compared with 29 per cent in November.
Official data on Wednesday showed that UK house prices rose at an annual rate of 3.3 per cent in November, the fastest pace since February 2023, leaving the average property costing £290,000.
The Office for National Statistics said growth in private rents eased only marginally to 9 per cent in the year to December from 9.1 per cent in November, with London by far the most expensive part of the country.
