2025, according to commentators and experts, is going to be a ‘buyer’s market’ for those seeking to purchase, with the assumption being competition among prospective homeowners is going to be slow, and ultimately there’ll be a much greater array of property to choose (and buy) from.
This viewpoint tends to lend itself to the supply of properties being more plentiful and/or demand not being as intense. While this might be true to some extent, I can’t help but retain the nagging feeling that there’s a very strong reason why the government wants to build one-and-a-half million new homes over the next five years – and it’s not because it believes there’s enough supply to meet demand.
Add in the fact most of the major house price indices are predicting further house price rises during the course of the year, and one wonders whether this ‘buyer’s market’ essentially means you have a slightly better chance of buying based on a slight increase in supply, as long as you can raise the required deposit or equity, meet affordability, pay increased rates of stamp duty potentially, and all the other myriad barriers that come with buying a home.
If I was a seller of an existing home, or a builder/developer of new homes, I’m not sure I’d be worrying too much that the property/properties I was going to bring to market in 2025 were going to hang around for months on end – with the obvious caveats here about them being priced correctly for their given market.
Greater competition for first-time buyers
In another true sense, while first-time buyers might be reading these headlines and thinking they have a much better chance of getting on the ladder in 2025, they might also wish to caution themselves that they are highly unlikely to be given carte blanche to pick up the properties they want without any competition veering into view.
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Even if they have secured all the deposit, mortgage and other costs of buying a first home, this is still unlikely to be the plainest of sailings for anyone.
Especially when you add in the changes to stamp duty that will come from April, the continued competition that will come from landlords who still want to buy to service excellent tenant demand, the huge length of time it takes to complete and, of course, additional traditional competitors for their properties, such as downsizers and others.
Still a better outlook
Of course, we should not discount the likelihood of there being some favourable conditions for first-time buyers in 2025, building on what has tended to be a pretty healthy market, as illustrated by the number of transactions from this borrower demographic in the last couple of years.
Indeed, as advisers may already be aware, first-timers have tended to be the largest purchasers of property in recent years. Research out of Yorkshire Building Society predicts that, during 2024, 330,000 first-time buyer transactions took place, compared to 290,000 in 2023.
Of course, this is not quite the 400,000 achieved back in 2021, but this was a rather unique year in terms of what the government was offering first-time buyers, plus the ultra-low interest rates and the shifts we were seeing in terms of people selling up in certain parts of the country because they no longer felt they needed to live close to work. All this aided and abetted first-timers back then, but it’s pleasing to see progress towards this number.
Indeed, a 40,000-per-year improvement in first-time buyers is nothing to be sniffed at, and our sector should certainly be doing all it can to help attain a similar growth trajectory in 2025 and 2026.
Such growth would ensure we would be above the 400,000 mark by the end of next year.
A glimmer of hope
How do we get there? Well, clearly, supply has to be plentiful, or at least growing and tracking demand.
We need to build more of the properties first-time buyers want and in the areas in which they want to live. We need high loan-to-value (LTV) mortgages in abundance to help those who do not have a Bank of Mum and Dad to help with deposits. We need rates to keep coming down, which will help more to achieve affordability.
We need all of this and probably then some, but the future – at least the relatively short- to medium-term one – does offer a higher degree of cautious optimism than we had through the course of most of 2024.
With the general election out of the way, the Budget too, there are fewer huge market-pausing events to steer around, and if we do also start to see the required movement in property numbers, then we should be able to support more first-timers into that first home.
Whether they will consider this year to be their year does remain to be seen, but there is certainly a better chance of it happening in 2025 than in the preceding two.
