
January 2025 | Challenges and Opportunities Ahead
26th January 2025
A step back. Last year the London property market showcased its well-established ability to navigate through uncertainties with remarkable steadiness.
Data from TwentyCI indicates that, in 2024, the UK property market experienced significant growth, with a 17% increase in the number of properties sold compared to 2023. Additionally, in 2024, residential sellers achieved about 97.1% of their initial asking prices on completed transactions, reflecting the market’s strength and the sustained confidence of buyers.
Despite economic pressures, the number of transactions was 5.4% higher than the 2017-2019 average, highlighting the market’s resilience and constant demand. These results are particularly significant when considering that proper diversification of property investments requires thorough evaluation of a market’s ability to demonstrate resilience during complex periods.
2025 Market Forecasts
The new year is expected to deliver confident numbers, marking a turning point compared to the modest growth of recent years. Since 2019, house prices in London have risen by 12%, compared to 21% nationally. However, in 2025, the demand for housing in London is forecasted to grow further. A Rightmove analysis predicts a 4% increase in UK house prices, with London likely exceeding this average.
Interestingly, the market is currently described as a “buyer’s market,” creating favourable conditions for buyers. However, this does not apply universally. Properties with unique or exceptional characteristics continue to retain their value, often commanding premium deals despite broader market trends.
Meanwhile, according to leading news outlets, Grosvenor, the property company of the Duke of Westminster, has recently sold a 25% stake (approximately £306 million) of one of its property portfolios, valued at £1.2 billion and located in the heart of Mayfair. The buyer, Norges Bank Investment Management, the Norwegian sovereign wealth fund, is further strengthening its presence in London following other acquisitions in the past.
Interests Rates & Co.
According to the Office for National Statistics (ONS), the Consumer Price Index (CPI) reached 2.6% in November 2024, exceeding the Bank of England’s 2% target. However, inflation appears to be easing, standing at 2.5% as of mid-January 2025. Historically, modest inflation has often supported property value appreciation. This is due to the fact that real estate is considered a “safe haven” asset class, that protects capital from the erosion caused by rising prices.
On the other hand, despite expected growth, we must take into account the upcoming changes to the Non-Dom tax regime in April 2025, which may reduce London’s appeal to some international investors.
Interest rates remain a crucial topic. The Bank of England has initiated a rate-cutting cycle, with current rates at 4.75%. Further reductions in 2025 could stimulate economic growth and make mortgages more accessible. Additionally, the Stamp Duty relief for first-time buyers will end in the Spring, encouraging many to finalise purchases before the deadline.
Innovation
During recent travels, accompanied by books, newspapers and magazines as usual, I was inspired by recipes from La Cucina Italiana (of course..) and immersed in the Memoirs of Hadrian by Marguerite Yourcenar (marvellous in her writing). The profound reflections of this visionary Roman Emperor resonated deeply, maintaining their relevance even today, as he reminds us that we are all responsible for shaping the beauty of the world we live in.
While browsing the November 2024 edition of The Economist, I learned that the UN has recognised the new year pivotal for quantum science, emphasising alignment between research, investments, and global goals. Key sectors like medicine, technology, and energy are set to benefit, transforming our habits, possibilities, and tools for facing the future.
Simultaneously, Artificial Intelligence (AI) is rapidly transforming industries, including real estate. While the full impact of AI will take years to unfold, investments in advanced solutions are accelerating progress. British Prime Minister Sir Keir Starmer recently stated that the UK has the potential to become an AI superpower, contributing to long discussed economic growth.
Trasformation
The Chinese New Year begins on 29th January, ushering in the Year of the Snake—a symbol of intelligence, intuition, and transformation. It seems that 2025 promises significant challenges and opportunities for science and global markets. In real estate, cautious yet strategic approaches will prevail, with investors focusing on acquiring assets with intrinsic resilience to market shifts.
My Wishes
In a city like London, where local and global economic dynamics are deeply interconnected, it becomes necessary to constantly reconsider our relationship with a broader economic and social context—a crucial step in addressing the challenges of an increasingly complex world with clarity and resilience.
London, this wonderful international city where the world loves to gather, bringing with it resources of every kind, both human and economic. A city that celebrates, to an extraordinary extent, a beauty that would not be so rich and impactful without positive external influences and diversity.