Hodge Bank has offered insights into the uncertain housing and interest rate landscape moving into 2025.
James Enos, national account manager at Hodge Bank, provided analysis on interest rates and house prices for the year ahead.
Enos said: “We have seen a steady reduction in swaps; however, the market remains unpredictable due to events both at home and overseas.
“The prevailing expectation is that interest rates in 2025 will largely mirror the levels seen in the past year.
“Initially, there had been hopes for multiple base rate reductions in 2025; however, these expectations have gradually been tempered, as more analysts are now considering two base rate reductions as a more realistic scenario.”
Enos added: “Our advice to consumers is that they should remain mindful that, even with potential rate cuts, the overall interest rate environment will still likely remain higher than pre-pandemic levels.”
“Given the current economic conditions, significant increases in house prices in 2025 seemed unlikely.
“However, certain areas in the UK, particularly those with high demand and limited housing stock, may see slight increases in property values.”
He said: “These areas could include popular cities or commuter hotspots where demand consistently outpaces supply, driving up prices despite overall market pressures.
“On the flip side, regions experiencing low buyer activity could witness price reductions.
“Sellers in these areas may find it necessary to adjust their expectations and lower prices to attract prospective buyers, especially if market activity remains subdued.
“Conversely, more rural or less in-demand locations may see a cooling effect, as sellers adjust to a slower market and focus on ensuring their properties are competitively priced.”
Market activity early in 2025 suggested a solid level of buyer and seller engagement, though it remained to be seen if this was due to seasonal factors or an increase in consumer confidence.
He said: “Despite the more cautious outlook on house prices, brokers have reported a solid level of market activity early in 2025, with many buyers and sellers remaining engaged.
“However, it remains uncertain whether this reflects a standard seasonal surge or whether this signals a broader increase in consumer confidence and appetite to purchase.
“It will be interesting to see whether the early activity we’re witnessing is simply a seasonal bounce or the beginning of more sustained momentum in the property market, with consumer confidence playing a crucial role in shaping the housing market in 2025, and we will be closely monitoring these trends in the months ahead.”
Looking forward, Hodge Bank anticipates moderate changes in interest rates and house prices for 2025.
Some stabilisation and potential for modest rate reductions is expected, but caution was advised amid global economic uncertainties.
