First-Time Movers: Market Expectations If You're Relocating in 2025

The UK property market has seen its share of ups and downs in the past few years, which leaves many first-time buyers wondering whether 2025 is a good time to finally make a move. We were warned that the first budget Labour created in 14 years would require difficult decisions, and in October, we were met with some of the key changes they had in mind. Here’s what movers can expect in the upcoming year.

House Prices are Expected to Rise

The budget outlined that while Capital Gains Tax rates on residential properties will stick at 18% and 24%, higher Stamp Duty thresholds will be lowered in April next year. According to recent forecasts, by mid-2025 house prices in the UK are expected to rise by 3.6% and by the end of the year, could have grown by 6.3%.

This is great news for those looking to sell and means the UK property market is resilient, but it could spell difficulty for first-time buyers. This concern stems from the reduction in stamp duty thresholds, impacting both new buyers and existing home movers, making property purchases more expensive for many across the market.  

However, northern regions in the UK remain at the top of the list for places to invest and relocate to. The North West, in particular, is expected to see a rise in prices of nearly 30% by 2029, followed by the North East and Yorkshire. Among the best places to invest and relocate to are Manchester, Leeds, Bradford, Liverpool and Newcastle.

Changes to Stamp Duty

Stamp duty fees on second homes are expected to rise by 2% and have already come into effect. As of April next year, first-time buyers won’t pay any stamp duty on properties up to £300,000, which is great news for those looking to buy apartments or cheaper homes. They will pay 5% on the value of the property if it’s between £300,001 and £500,000.

In addition to fees like property surveys and removals services, this can make moving a costlier endeavour than ever before. Buying sooner rather than waiting could be a good move to help first-time buyers potentially save thousands. With this in mind, it’s expected that there will be a rush before April for first-time buyers to get on the property ladder before the threshold is reduced, with many expected to relocate to more affordable locations like northern towns and cities.

Is it Bad News for Movers?

While the future for first-time buyers may seem difficult, there’s good news to consider. The ISA and Lifetime ISA rules have remained in place, including the contribution limits, which will stay at £20,000 for ISAs and £4,000 for a Lifetime ISA.

The Budget's recent changes may lead to a rise in mortgage rates temporarily. According to the Office for Budget Responsibility (OBR), economic growth is now anticipated to outpace earlier predictions for both this year and the next, driven by an increase in government spending of nearly £70 billion annually, equivalent to just over 2% of GDP.

However, the OBR also forecasts that while the Budget's measures will temporarily raise inflation, with rates averaging 2.5% in 2024, 2.6% in 2025, 2.3% in 2026, the longer term outlook should then stabilise to a suggested 2.1% in 2027 and 2028. This projected inflation exceeds the expectations of many economists, including the Bank of England, for the coming years. As a result, mortgage interest rates might decline more gradually than previously predicted.

£5 Billion Investment to Boost Housing

The Chancellor has announced a £5 billion plan aimed at increasing the availability of affordable housing, pledging that the Labour government will "get Britain building again." The initiative includes expanding the Affordable Homes Programme to £3.1 billion, as well as offering £3 billion in financial support and guarantees to boost housing supply and aid smaller house-building firms.

According to the Chancellor, these measures aim to provide more people with a "safe, secure, and affordable place to live." Increasing the housing supply could alleviate the affordability crisis by giving buyers, first-time and relocators alike, more options—provided the homes built remain within reach of ordinary citizens. But how quickly will these changes make a difference?

For those looking to get on the property ladder, the promise of new housing or eased planning restrictions may feel like déjà vu. The government has pledged to tackle the housing shortage, but the country still faces a deficit of 4.3 million homes. Any meaningful progress is likely to take some time, leaving many wondering when these ambitious goals will translate into real change.

Help for First Time Buyers

One of the pledges that Labour put in place was to boost the Mortgage Guarantee Scheme, originally initiated by the Conservative government to help first-time buyers who needed to access low deposit mortgages to get on the property ladder. Rebranded to the Freedom to Buy scheme, there were no further details outlined in the October budget, but there are hopes that the Chancellor will provide assistance to first-time buyers next year by improving the Lifetime ISA scheme.

Currently, the 6.25% withdrawal fine for anyone buying over the £450,000 price limit means that many are put off from using the scheme. In particular, for Londoners, where the average house price is now in excess of £520k, the scheme in its current state would mean they would be penalised. Changing the ruling around this would make saving for a first home much more accessible and appealing.

Support mechanisms like the ISA and Lifetime ISA schemes remain in place, and potential reforms, such as adjustments to the Lifetime ISA withdrawal penalty, could improve accessibility for buyers in high-cost areas around the UK. Labour’s ambitious housing policies, including the £5 billion investment plan, highlight their commitment to addressing the affordability crisis, but there’s no denying that progress will be gradual.

Ultimately, first-time buyers should weigh their financial circumstances against market conditions, balancing short-term challenges with the long-term potential for property ownership in this evolving landscape.

Written By Annie Button