2024 review, and could the market thrive in 2025?

Market Update
Tim shared his data-driven insights on how the property market evolved this year, and the outlook for 2025. Following a stop-start year in 2023, the general consensus in 2024 was a desire to get on with things.

Sales picked up across the course of the year, with overall activity significantly above 2023 levels and slightly higher than 2019. As of the latest data, SSTC activity is around 20-30% higher than in 2023. Housing stock levels were also on the rise, building back up from historic lows, with current levels now at around 12% higher compared to a year ago.

But affordability remains a concern for many, despite a greater availability of stock. Mortgage rates, while down from the highs of July 2023, remain significantly higher than pre-pandemic levels. As a result, there is still a need to price sales competitively. Since the end of 2022, we have seen the proportion of stock being reduced come back down to more normal levels, and price growth has been muted in recent months.

In the rental market, there remains a significant mismatch between supply and demand, though this has been easing, and we are seeing more price reductions compared to 2023. However, despite demand from renters, an increasing number of landlords are selling up — with around 17% of current properties in sales channels having come from lettings. According to a recent Rightmove survey, legislation, compliance and regulation are the key concerns driving landlords to exit the market.

Off the back of robust activity levels in 2024, uncertainties and challenges remain in 2025 — but there are certainly some positive signs. Having seen inflation slow and the cost-of-living squeeze lessen, we can reasonably expect to see further rate cuts from the Bank of England next year. Sales prices are forecasted to rise by 4% by the end of next year, alongside a slight increase in sales activity, while the supply-demand imbalance in the rental market is expected to continue to ease.

Industry insights from Kensington’s CEO
Frances was joined by Mark who shared his thoughts on the industry trends we saw in 2024, and his predictions on whether the market will thrive next year. Following a frenetic few years, the market in 2024 was relatively calm, but it was still held back by a lack of consumer confidence. One of the key lessons from the turbulence in the years since the pandemic is that volatility is the new normal — which means resilience is key for brokers and lenders alike.

As we approach the two-year anniversary of Barclays’ acquisition of Kensington Mortgages, Mark reflected on the successes of the move, despite it being a challenging time within the market. By bringing the two businesses together — each with their own unique propositions and customer bases —the ability to serve a broader market has been key. In the year ahead, further growth is expected as Barclays continues to support and invest in Kensington.

In the wider market, we are likely to see continued volatility in 2025, but the outlook is positive. 2024 has shown that there is real momentum in the market: what we need now is the consumer confidence to unlock pent-up demand. Alongside the expectation that interest rates will continue to fall, the government’s ambitious target to build 1.5 million new homes over the next five years, and discussion around refreshing mortgage guarantee schemes to support first time buyers, is all helping to fuel momentum.

Mark also highlighted the potential for ‘right-sizing’ to catalyse the market and to help address the UK’s housing supply issue. Research published by Barclays this year found that right-sizing, or down- sizing, could unlock significant untapped capacity in the housing market. With the right interventions by policymakers, as many as 3.8 million homeowners could be encouraged to move home, freeing up spare capacity.

Utilising technology to deliver consistently high levels of service to customers will be key for brokers going into next year. While there is much discussion around the potential for AI to disrupt, Mark advised that the industry instead engages with and embraces new technologies. By using AI to reduce administrative burden and to gather data and insights, brokers can spend more time on what they do best: engaging with clients and adding value.

While predicting a strong 2025, Mark urged both lenders and brokers to continue to innovate and not to remain stagnant — and, as always, the customer must come first. Asked about his leadership advice having spent 35 years in markets around the globe, Mark’s key advice is to ‘lean in’ and take on the challenging assignments: the skills that you build in tough times will put you in good stead for the more positive periods.