MHHG estate agents

The UK housing market has experienced a solid recovery in 2024, with an uptick in both sales and house prices compared to the previous year. As we look ahead to 2025, the outlook for the sales market remains cautiously optimistic, despite the uncertainties around economic factors such as the impact of the upcoming Budget and potential changes in mortgage rates.

National Overview: The UK Sales Market in 2024

The housing market in 2024 has exceeded expectations, driven by faster growth in household incomes and a reduction in mortgage rates. House prices have increased by 1.5% year-on-year to October 2024, reversing the 1.2% decline seen in 2023. The recovery has been strongest in the North West, with house prices in this region seeing a 2.9% rise, one of the highest rates across the UK.

However, the impact of affordability pressures remains clear, particularly in southern England. In regions like Ipswich, Truro, and Dartford, house prices have continued to experience slight declines. These regions face greater affordability challenges, compounded by higher mortgage rates.

Prospects for 2025

Looking ahead to 2025, we anticipate house prices and sales volumes will edge higher, despite the ongoing uncertainty in the economy. Lower mortgage rates and a return to price growth are expected to help drive the market forward. The main driver will be the growing income levels, which have helped to restore housing affordability after the sharp increase in borrowing costs between 2022 and 2023.

Mortgage rates are expected to remain stable at around 4.25% for a 75% loan-to-value 5-year fixed-rate loan. However, the affordability challenge will continue, especially for buyers in the South, where prices remain relatively high compared to income levels. In the North West, including Manchester, the market is expected to continue outperforming national trends, benefiting from stronger demand and more affordable pricing relative to southern regions.

Manchester Market Overview

In Manchester, the property market has shown resilience and growth, driven by continued demand for homes close to the city centre and key amenities like the Etihad Football Stadium and the new Co-op stadium. As we approach 2025, Manchester’s property market is expected to remain one of the top-performing areas in the UK, with price increases expected to continue at a steady pace.

Recent sales data show that demand is 25% higher compared to this time last year, and the number of sales agreed is 19% higher. This growth is expected to continue into 2025, supported by both domestic buyers and investors drawn to Manchester's appeal as a major cultural and economic hub.

House prices in Manchester have seen a 2.9% increase year-on-year, reflecting the broader trend seen across Northern England, where price inflation is outpacing that in the South. This growth is likely to continue as buyers seek more affordable properties compared to those in London and the South East.

The pipeline of sales in Manchester is also 30% larger than last year, and with first-time buyers remaining a significant driver of demand, the market is expected to continue growing. We anticipate a 5% increase in sales over 2025, with an estimated 1.15 million housing transactions across the UK.

Factors Affecting the Manchester Market

Key factors influencing Manchester’s market in 2025 include:

Stamp Duty Changes:

From April 2025, higher stamp duty rates will affect a greater proportion of buyers. This will impact the affordability of properties, especially for first-time buyers and those purchasing in the lower to mid-market price range.

Mortgage Rates:

Although mortgage rates are expected to remain stable, the higher cost of borrowing could still affect affordability for many buyers, particularly in the more expensive segments of the market.

Regional Performance:

Manchester’s property market benefits from being in one of the fastest-growing regions in the country. With relatively affordable house prices compared to the South, buyers are increasingly turning to cities like Manchester for better value and investment opportunities.

Conclusion

The outlook for Manchester’s property market in 2025 is positive, with continued growth expected despite the challenges posed by higher borrowing costs and stamp duty changes. The city remains one of the most attractive locations for homebuyers and investors in the North West, driven by its economic strength, cultural appeal, and relatively affordable property prices.

At MHHG Estate Agents, we are committed to helping our clients navigate these changing market conditions, ensuring they make informed decisions when buying or selling property in Manchester and beyond. Whether you're a first-time buyer or an experienced investor, we are here to guide you through every step of the process.