Turning the Corner: Signs of Stability After Years of Market Turbulence

For those of us in the property industry who remember the post-covid market of 2020 to 2022, we experienced a post-lockdown surge in demand for properties, fuelled by next to zero interest rates, a stamp-duty break and the desire to be located outside large conurbations, which all led to bidding amongst buyers. As a result, with the number of would-be purchasers far outweighing supply, many of the better houses in Sussex generated fierce competitive interest and achieved a spectacular price.

In 2023, the world changed! Interest and mortgage rates spiked from the 14 year low to reaching unnerving highs, and confidence tattered – a trend that continued into 2024.

Wind forward to 2025; a very different year in which the pendulum had swung from being a seller’s market to a buyer’s market. It was a year in which demand for properties, especially those in the upper price sectors, fell to an almost unprecedented low. This meant that many of those who had intended to sell and downsize were deterred from doing so and, as a result, the supply of good, top-end property coming to the market was similarly weak. There were of course some notable exceptions, as there always are in the fickle country house market.

Since the Budget at the end of November, which many agree could have been significantly ‘worse’, optimism for the coming year is encouragingly (even surprisingly) positive. With inflation having fallen sharply to 3.2% in the year to November (down from 3.6% the previous month), the Bank of England cut the base rate to 3.75% just before Christmas and sentiment across UK businesses is beginning to see a welcome upturn. The latest reduction has certainly helped to dilute uncertainty and lift optimism, and High Street Lenders have reduced their mortgage rates to the lowest rate since 2022.

Interest rates are a key driver for the housing market. With the economy widely predicted to have recorded zero-growth over the final few months of last year, prospects for additional rate cuts in the short/medium term seem slim, which should encourage property buyers requiring a mortgage finance to press on with their plans, rather than delay in the hope of benefitting from still lower rates.

Looking ahead to the coming year, the market is likely to be influenced by those who put their plans on ‘hold’ in 2025. I am confident the supply of good property will improve, especially as values have reduced and stabilised, and there will be more committed buyers coming off the fence after the budget and mortgage rate reductions. Given the most recent economic forecasts, the south-east is likely to outperform most other regions in the UK, so I think we can be cautiously optimistic about the year ahead.