Hamptons has released its Market Insight – Winter 2025 report, outlining the key shifts in the housing market through 2024 and into the year ahead.
The report revealed narrowing profits for home sellers, a cooling rental market, reduced outward migration from London, and a notable rise in family property transfers – set against a backdrop of shifting interest rates and evolving tax policies.
House prices rose by 4.7% in 2024, reaching an average of £269,426, marking the strongest annual increase since October 2022.
However, the average gain on home sales fell to £91,820, down from £102,650 in 2023 and £112,930 in 2022. Sellers in 2024 had typically owned their property for 8.9 years.
London homeowners continued to make the largest profits, with an average gain of £172,350.
This marked the first time since 2015 that gains in the capital fell below £200,000.
The South East and South West followed, with sellers in each region achieving a 41% uplift on their purchase price.
The reduction in gains, coupled with relatively high mortgage rates, has slowed progression up the housing ladder.
Flat owners, in particular, were found to face challenges in generating sufficient equity for their next move.
As the 1st April deadline for the end of temporary Stamp Duty concessions approaches, first-time buyers increased their activity.
They accounted for 20.8% of homes sold over £425,000 in November and December, up from 17.5% for the year and 14.5% in 2023.
However, with the average time from offer to completion standing at 119 days, most buyers aiming to beat the tax changes are unlikely to succeed.
In the wake of the Autumn Budget, financial markets scaled back interest rate cut expectations to two 25-basis-point reductions in 2025.
While mortgage costs rose sharply in December, lenders have begun competing more aggressively, with rates expected to fall below 4% by year-end, especially for buyers with large deposits.
Hamptons forecast house price growth of 3% for Great Britain in 2025, with London leading the recovery.
Just 5.7% of homes outside the M25 were purchased by Londoners in 2024, the lowest share since 2013.
The 57,020 transactions represented a 45% decline from the 2021 pandemic peak and 19% below the 2015–2019 average.
This slowdown was attributed to the return to office working, subdued house price growth in the capital, and affordability constraints.
Nevertheless, first-time buyers continued to exit London at record levels, accounting for 31% of buyers acquiring homes beyond the capital.
These buyers moved an average of 25.5 miles, while sellers relocating from London moved 45.4 miles – both distances above pre-Covid averages.
Brentwood topped the list of local authorities seeing increased London buyer activity, with 47% of 2024 transactions involving capital-based purchasers.
Other notable areas included Colchester (27%), Epsom & Ewell (74%), and Rushmoor (25%).
Hamptons expected outward migration to increase in 2025 as easing mortgage rates and equity gains prompt more homeowners to relocate.
However, continued affordability pressures will drive many beyond the Home Counties.
Rental growth across Great Britain slowed to 2.0% in 2024, returning to pre-pandemic norms after four years of double-digit increases.
Despite the moderation, rents are now 35% higher than in 2019, adding £4,214 to average annual tenant costs.
Scotland and the Midlands recorded the strongest rent increases, at 5.5% and 5.2% respectively.
London saw a 0.2% decline, following an 11.4% rise in 2023. In the East and South East, rents rose by 1.2% and 2.0% respectively.
The slowdown was partly due to improved supply, with December 2024 stock levels up 10% year-on-year.
However, listings remained 13% below 2019 levels, suggesting further upward pressure on rents may return in 2025.
Gross yields for new buy-to-let (BTL) purchases in England and Wales rose to 7.1% in 2024, up from 6.1% in 2019.
Hamptons anticipated renewed investor interest in the sector as interest rates fall and deposit returns become less competitive.
However, the Renters’ Rights Bill, due in late summer, could cause landlords to reassess strategies under new rules introducing indefinite tenancies.
Despite concerns, the English Housing Survey indicated no major exodus of landlords, with institutional investors offsetting smaller landlords’ exits.
The number of rental homes remained broadly unchanged since 2016.
The increase in Stamp Duty surcharge for additional properties from 3% to 5% has not significantly impacted landlord activity.
In November and December, landlords accounted for 11.0% of purchases, above the monthly 2024 average of 10.2%.
Investors increasingly turned to the North and Midlands to mitigate tax costs.
In the North East, landlords made up 18.4% of buyers in November, drawn by gross yields of 9.7%, compared to 5.7% in London.
The Government expects the surcharge to raise £400m annually; however, historical trends from Scotland, where a similar measure led to a drop in investor activity, suggest a potential long-term impact.
An estimated 220,000 homes were transferred within families without monetary exchange in 2024, up from 152,000 in 2023.
These transactions represented around 13% of all property transfers in England and Wales.
Of these, 61% were partial transfers – typically to spouses or partners – while 39% involved the full transfer of ownership, usually to children or grandchildren.
The trend was driven by concerns around Capital Gains Tax and anticipated changes to inheritance tax.
Recent Budget measures included freezing the nil-rate inheritance tax threshold and reforming business and agricultural property reliefs.
In parallel, unused pension funds are set to be included in estates for IHT purposes from April 2030.
Hamptons expected the number of equity handovers to continue rising, as older generations seek to support younger family members in accessing the property market while planning ahead for inheritance tax efficiency.
Aneisha Beveridge, head of research at Hamptons, said: “We’re firmly in the midst of the spring selling season.
“And this year, a raft of mortgage rate cuts has helped boost the housing market.
“The number of agreed sales is up 10% year-on-year across the country, while the average house sold so far in March went for 99.2% of the asking price.
“This is the second-highest March figure since our records began in 2007 – it was only higher in March 2022, in the midst of the pandemic boom.
“Although Bank rate was held at 4.5% this month, the inflationary effects of global trade tensions and April’s increase in the National Living Wage and employers’ National Insurance Contributions (NICs) mean there is now more uncertainty over the trajectory of interest rate cuts.
“Financial markets are currently pencilling in a 50% chance of a rate cut in May, although increased competition has meant mortgage rates have drifted down slightly.
“Some deals are now available below 4%, which is an important psychological marker for buyers.
“However, one segment of the market that isn’t showing any signs of a spring thaw is second homes.
“As our latest research reveals, the share of would be buyers seeking to buy a second home has fallen to a record low.
“The existing stamp duty increase on these purchases is then set to be compounded by councils’ ability to introduce a 100% premium on council tax for second homes from 1 April.
“The start of next month also sees stamp duty increase, and tomorrow we have the Spring Statement.
“While no major tax increases are expected, the Chancellor will give an update on the health of the British economy.
“As always, we will be analysing what it all means for the housing market.”
