Average house prices could rise by 4% in 2025 but one set of people will benefit

In 2025 it is likely that home buyers will be 'spoilt for choice' according to Rightmove. The online property portal states that the average number of available homes per estate agent branch is at its highest for this time of year in 10 years, so while the number of buyers in the market is significantly higher than this time last year the choice of property is at an even higher level, making it a buyer's market in many areas.

Rightmove expects the number of homes for sale to remain high through 2025, which means strong competition will remain for sellers, which will likely prevent higher price growth. However, these factors will also help agreed sales, and Rightmove anticipates a higher number of transactions in 2025 of around 1.15 million in total.

The company also predicts the UK national average house price will rise by 4% in 2025, its largest prediction for price growth since 2021, in-line with average long-term price growth. Looking more long-term at the potential trends for the housing market in Wales within the context of the UK, James Thomas, associate director at Savills Cardiff, said: "Following the subdued market we have seen during 2024, the return to positive growth next year will be welcomed by many."

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James Thomas continued: "The value of prime residential property in Wales has been steadily increasing, albeit not at the same pace as in other parts of the UK. In the five years to September, average values in Wales rose by 6.4% compared to an average of 10.7% across the UK overall.

"However, the long-term forecast by Savills indicates a step-change, with Wales, along with Scotland, expected to see the strongest gains over the next five years, peaking at 20.5% growth by 2029." Find out more about long-term house price trends here.

Regarding mortgage rates Rightmove predicts that the average five-year fixed and the two-year fixed mortgage rate are likely to be around 4% by the end of next year, based on current market trends. This is lower than the current 4.83% and 5.08% for the five-year and two-year fixed rates respectively and it will help improve affordability and further boost consumer confidence.

There may be room for rates to come down a bit more in 2026, but the company suggests there will not be a return to the historically low rates seen prior to the cost-of-living crisis. Matt Smith, Rightmove’s mortgage expert said: "It is likely to be a mixed year for the market. Those who took out peak-mortgage rate two-year fixes after the mini-Budget will see their deal come to an end and will likely find themselves with lower costs next year. Combined with wage growth, they may feel some significant affordability improvements.

"By contrast, many movers will be rolling off a relatively low five-year fixed rate agreed during the busy market of 2020 and will see costs rise. With remortgaging and product transfers set to be an important theme for lenders next year, we’ve launched a remortgage rate tracker to show the latest trends in this sector and monitor lender behaviour next year."

Stamp duty rates in England are due to rise on April 1, 2025 creating a potential predicted rush to buy before that date according to Rightmove, but in Wales the equivalent cost, the Land Transaction Tax (LTT), is not due to increase for main residency properties according to the Welsh Government's draft budget released on December 11, 2025.

The draft budget states that the LTT main residential rates are to remain unchanged from the previous permanent change to the rates in October 2022, and prior to that in December 2020. However, the Welsh Government also states that from 11 December 2024, a higher residential rates of LTT will apply to purchases of additional residential properties - an increase by 1%, raising an estimated additional £7 million in 2025-2026. The Welsh Government states that this change is 'broadly in line with changes made to Stamp Duty Land Tax in England and Northern Ireland'.

The draft budget for Wales will be scrutinised by Members of the Senedd before a final vote in March 2025, find out more about the proposed budget plans here.

Tim Thomas, policy and campaigns officer at Propertymark the leading professional body for estate, letting and commercial agents, auctioneers, valuers and inventory providers, commented: "Propertymark is disappointed that Land Transaction Tax for additional properties has increased by 1%. The investment in affordable and social homes also announced is welcome, but until social housing supply keeps up with demand, we called for the surcharge on additional properties to be cut to stimulate supply in the private rented sector.

"However, it is encouraging that the Welsh Government has listened to our call for fair funding for local authorities in Wales given the requirements of enforcing the Renting Homes (Wales) Act and proposed Building Safety Act. This increase in funds must be used for these additional legislative challenges for the housing sector."

In addition, the draft budget states that there is likely to be '£81 million more capital funding to build more homes for social rent, helping to reduce homelessness and ensure everyone in Wales has a place to call home' as well as the proposal to budget £3.7 million to 'accelerate planning decisions and digitise planning services'.

The draft budget also proposed a £57 million investment to continue the Help to Buy Scheme in Wales, launched in 2014 with the objective to provide a government program to help people buy a new-build home by providing an equity loan.

Sara Taylor, sales director at Dandara Wales & West, commented: "It is welcomed news that the Welsh Government has included the extension to Help to Buy in its draft budget for 2025-26, showcasing housing as a priority for Wales and those looking to get a foot on the property ladder. This is a timely decision which will allow first-time buyers and second steppers to go ahead with their new homes purchase for 2025, and possibly boost their budgets safe in the knowledge that Help to Buy is there to support them for another 18 months.

"As we look to enter a period of ‘the new normal’ with budgets still being tightened with stubbornly high mortgage rates and house prices, these national measures and schemes should look to be more permanent rather than temporary giving many buyers more time and opportunity to make the move."