Robert Gardner, Nationwide’s Chief Economist, emphasized the significance of these forecasts, particularly as the property market prepares for future stamp duty adjustments. The estimate provides a view into the financial world of 2025, offering homeowners cautious optimism while also foreshadowing future market instability.
House price growth and the implications for homeowners
Nationwide’s forecast indicates that the typical UK homeowner could see their property value rise by up to £10,725 in 2025, based on an expected 2 to 4 percent increase in house prices. Robert Gardner, the building society’s Chief Economist, emphasized that these increases would largely depend on broader economic conditions, as well as regional demand.
“Upcoming changes to stamp duty are likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax” Gardner said. The market may see a surge of activity in the early months of 2025, with some areas experiencing higher price growth than others. However, Gardner also cautioned that the market remains unpredictable, particularly as inflation and interest rates continue to influence buyer behavior.
The forecasted rise in property values could provide some relief to homeowners looking to secure their financial positions in a fluctuating market. Yet, for buyers, affordability remains a challenge, especially in high-demand regions where prices may continue to outpace wage growth.
Stamp duty changes and their potential impact
A central factor in Nationwide’s housing market outlook is the upcoming changes to stamp duty, set to take effect in April 2025. The new rules will see the threshold for home movers drop from £250,000 to £125,000, while the tax-free threshold for first-time buyers will decrease from £425,000 to £300,000. These adjustments are expected to trigger a rush in property transactions as buyers seek to complete their purchases before the new tax regulations come into force.
Toby Leek, President of NAEA Propertymark, also weighed in on the current market dynamics, noting that property activity in England and Northern Ireland has been higher than usual, defying the typical winter slowdown.
Toby Leek said:
“Buyers and sellers in England and Northern Ireland are looking to complete their home move before the Stamp Duty changes commence from April 2025, and it’s expected that coupled with slow increases in affordability and wages, this spike of momentum in mortgage approvals and housing market activity will continue.”
As many purchasers attempt to secure their properties before the new standards apply, the first quarter of 2025 is probably going to see a spike in activity. However, as buyers and sellers get used to the new tax environment, the market may see a period of slower transactions once the rush has passed. The latter half of the year might provide a more methodical and thoughtful approach to real estate decisions for individuals who have more time.
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