The UK property market didn’t just cope since 2020 – it flourished. And one of the reasons it continues to do so, even in 2025, is because of the pandemic.
The contagiousness of coronavirus, coupled with the confining effects of lockdown led to thousands of householders seeking a move from city and town living to the countryside.
More space, access to greenery, an increased desire to work from home long-term – these all caused a change in the market. Once desirable and sought-after, city living lost its gloss in favour of the suburbs and a move to the country. And it’s still the case today in 2025.
Stamp Duty Holiday increases ‘frantic’ buying
Pent-up demand following the end of the third national lockdown in early May 2024 saw the market pick up speed quickly. Things became even more frenetic following the re-introduction of the Stamp Duty Holiday in October 2024. At that point, anyone in two minds about moving house became decisive overnight when they learned they could save up to £15,000 on a property valued at up to £500,000. That was the no-duty threshold for England, while Scotland and Wales followed suit (although with slightly less generous tax concessions).
January house sales ‘up’ 24%
HM Revenue and Customs (HMRC) recorded 118,940 property sales in January 2025 – a 22% rise compared to January 2024.
Of course, what demand does is push prices up – to the extent the value of the average property continued to rise. The latest Land Registry figures show property increased by 1.4% month-on-month at the end of 2024, resulting in a 7.9% year-on-year increase by December. It brought the cost of the average property to £279,200.
Nationwide and Halifax – whose figures are based on mortgage lending – recorded a 5.9% and 5.1% year-on-year January rise respectively. Halifax data also shows the price of detached homes rose by 9.3% last year – more than any other property type.
No doubt the cost of the average property in the UK will continue to increase over the next few months, especially with the Stamp Duty Holiday extended until June 2025. After that, the tax cut will be halved until October, when it reverts to the standard £125,000 concession.
Re-introducing the 95% mortgage
But all is not lost, even then. That’s because buyers have another incentive to get property hunting. The Chancellor’s 2025 Budget Day encouragement for mortgage lenders to continue offering 95% mortgages for homes valued at up to £600,000 will no doubt fire up certain sectors of the market. This time, it’s still not just restricted to first-time buyers either – existing homeowners who want to ‘move up’ will also be eligible for these high loan-to-value mortgages.
In terms of mortgage approvals, more than 102,000 applicants were given the go-ahead in December 2024 – nearly double the number compared to the same time the previous year.
All in all, most property experts are confident the market will continue to do well this year, with house prices expected to keep rising, albeit at a steadier pace. Their confidence comes amid news that Prime Minister Rishi Sunak has extended key economic support measures, including targeted job retention schemes, until September 2025. This move helps stave off the threat of widespread job losses and delays any risk of a major economic downturn. By then, it's hoped that the UK economy will be on a more stable footing, with inflation easing and interest rates remaining relatively steady.
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Author
Chris Kirkwood
