The residential real estate market in 2025 is anticipated to experience modest growth, influenced by factors such as mortgage rates, housing inventory, and regional economic conditions. Below is an overview of the projected trends:
Home Prices and Sales
United States: Zillow forecasts a 2.6% increase in home values for 2025, aligning with the growth observed in 2024. Existing-home sales are projected at approximately 4.3 million units.
United Kingdom: House prices rose by 3.3% in 2024, with an average price of £297,166. For 2025, modest growth is expected, with regional variations. The Midlands and Northern England may outperform the UK average, with a forecasted 2.5% annual increase in property values.
Mortgage Rates
- United States: Mortgage rates are expected to stabilize, potentially enhancing affordability and encouraging buyer activity. However, economic policies and market conditions will play a significant role in determining the exact rates.
Housing Inventory
United States: An increase in housing inventory is anticipated, providing buyers with more options and potentially easing competition in the market.
Australia: A decline in home construction approvals poses challenges to addressing housing shortages. Significant policy reforms may be necessary to stimulate activity and improve housing affordability.
Regional Variations
United States: Affordability improvements are noted in cities like Austin, San Antonio, Dallas, and Fort Worth, while California cities such as San Diego and San Jose remain among the most expensive markets.
United Kingdom: Northern Ireland experienced the highest growth at 7.4% in 2024, with London remaining the most expensive area.
Market Dynamics
United States: The market is expected to become more favorable for buyers, particularly in the Southwest, provided mortgage rates remain steady.
United Kingdom: The termination of stamp duty relief for first-time buyers in April 2025 could lead to a temporary price hike as buyers rush to beat the deadline.
Conclusion
The residential real estate market in 2025 is poised for modest growth, with regional disparities and evolving market dynamics. Prospective buyers and investors should closely monitor local market conditions, mortgage rate trends, and policy changes to make informed decisions.
For a more in-depth analysis of the housing market trends expected in 2025, you may find the following video insightful: