Housing market to be busy in 2025 but doubts cast over Labour’s 1.5 million homes target

The property market in 2024 saw huge uncertainty due to the general election and the Budget but stamp duty changes and potential interest rate cuts could provide some relief next year.

Leaders Roman Group say the first half of 2025 will be busy as buyers rush to complete before stamp duty changes.

The estate and sales agents also cast doubt on whether Labour will be able to build 1.5 million homes over the next five years.

Busy first quarter of 2025

Tim Foreman, managing director of Land and New Homes, Leaders Romans Group (LRG), said: “We expect a busy first quarter of 2025, largely due to the increase in Stamp Duty which kicks in from April.

“A first-time buyer whose Stamp Duty cost could rise from £0 to £6,250 in Q2 would be well placed to start house-hunting at the earliest opportunity.

“Further drops in interest rates over the course of the year will also provide some relief, though the extent to which the Bank of England reduces the base rate, and the extent to which mortgage lenders follow suite, is unclear. “

Overhaul planning system

Mr Foreman says the Labour government’s plan to overhaul the planning system has set out ambitious goals.

He said: “Looking to the longer term, the publication of the revised National Policy Planning Framework (NPPF) proposals heralded some positive changes to the planning system, putting in place plans to realise the government’s ambitious housebuilding targets.

“With more housebuilding, the market will offer more choice and, with more chance of finding the perfect home, the ‘want to move’ market segment will be more inspired to buy.”

However, Mr Foreman adds building 1.5 million homes is easier said than done.

He said: “I see most of Labour’s housebuilding plan taking place in the latter years of this Parliament: it’s unlikely a site put forward for planning early in 2025 will be home to its first residents until at least 2026.

“The ambitious housebuilding programme depends on much more than the planning system. I am concerned about the number of construction workers, trades and craftspeople available to work on the sites of the projected 1.5 million homes.

“I’m also concerned that an increase in quantity does not denote a decrease in quality. While the housebuilding industry heaved a collective sigh of relief when ‘beauty’ was removed from the NPPF, design standards must be retained.”

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