Q1 2025 - South East

Q1 2025 South East Property Market and What to Expect

As we step out of Q1 2025, the South East property market is gearing up for a year of steady growth, changing dynamics, and opportunities for both buyers and renters. From increasing sales to moderating house price inflation and shifting rental trends, here’s a breakdown of the first quarter in 2025.

Rental Market Figures

The rental market in the South East continues to thrive as demand remains high, especially in areas within commuting distance of London. The average rent for a property in the South East is currently around £1,300 per month, reflecting a slight increase from the previous year.

• One-bedroom properties typically rent for around £950 - £1,100 per month.

• Two-bedroom properties range from £1,200 - £1,400 per month.

• Larger three-bedroom homes can go for rents between £1,500 - £2,800 per month.

Limited supply and strong demand from renters, driven by affordability issues for many would-be buyers, suggest that rents could continue rising in the coming months. Landlords are seeing healthy returns on their investments, but this could also put more pressure on renters in some areas. With affordability being a key concern for many, rental prices will likely remain a hot topic in the South East throughout 2025.

Steady Growth in Sales Agreed

The South East property market is set for steady growth in sales agreed throughout 2025. With more sellers entering the market, many of whom are also prospective buyers, there’s an increased fluidity that should help boost transaction numbers. As confidence grows, the market is expected to see a steady rise in homes changing hands, and activity is likely to increase as the year progresses.

Moderating House Price Inflation

House price inflation, which has been a dominant factor in recent years, is expected to moderate in 2025. With more properties coming onto the market, supply should begin to catch up with demand, reducing some of the pressure on prices. Additionally, the impact of stamp duty changes in England will likely play a role in house price moderation, creating a balancing effect as buyers and sellers adjust to the new market conditions. This shift toward stability could signal a more sustainable growth trend for property prices in the region.

Focus on First-Time Buyers

First-time buyers are expected to remain at the heart of the South East property market, particularly in more expensive areas. Thanks or no thanks to recent stamp duty exemptions, many homes in the region will be stamp duty-free for first-time buyers, presenting an attractive opportunity for those looking to step onto the property ladder. This focus on first-time buyers will likely drive much of the market activity, particularly in the spring months, as more individuals and families seize the chance to purchase their first home.

Impact of Stamp Duty Changes

One of the most significant shifts in 2025 will be the changes to stamp duty, which were expected to kick-start housing market activity early in the year. Buyers looking to avoid the extra charges associated with the new stamp duty rates did act quickly to complete transactions before the changes took effect. This urgency led to an increase in sales volumes in the first quarter of the year. While this could result in a brief surge in market activity, it may also cause a temporary slowdown once the immediate rush subsides. We will see!

Declining Mortgage Rates

Mortgage rates are expected to continue declining as 2025 progresses, improving affordability for many buyers, particularly first-time buyers and those looking to remortgage. As borrowing becomes more accessible, pent-up demand from buyers who were previously priced out of the market could flood back in. This will likely boost sales volumes further, with buyers looking to lock in lower rates before they rise again. The combination of lower mortgage rates and a more favorable lending environment is expected to provide a significant boost to market activity in the second half of the year.

Price Trends in the South East

The average property price in the South East stands at £441,000, with the median price at £370,000. Over the past 12 months, the average price has dropped by £8,500, or -2%, reflecting a slight cooling in price growth. However, with house price inflation moderating and stability on the horizon, these figures are expected to start rising again as we move into the second half of 2025. While the market may not see dramatic price hikes, gradual growth is anticipated as the year progresses.

London’s Role in the Market

Although the broader South East market is experiencing steady growth and moderation, London is set to lead the recovery phase. With more employees returning to the office and improved mortgage deals, property prices in the capital are expected to bounce back strongly. This recovery in London will likely have a ripple effect across the South East, benefiting surrounding areas as buyers look for more affordable options outside the city. This could further stimulate market activity and add momentum to the housing cycle in the South East.

Overall Market Outlook

Experts generally expect house prices in the South East to rise overall in 2025, though there may be a brief slowdown following the initial impact of stamp duty changes. The market’s resilience, bolstered by declining mortgage rates, first-time buyers, and the stamp duty exemptions, will provide a solid foundation for property transactions throughout the year. The key will be balancing supply and demand, ensuring that the market remains stable and sustainable in the long term.

For Landlords, the outlook remains strong, with rents expected to continue climbing due to strong demand and limited availability. For both buyers and renters, 2025 promises to continue to be a dynamic year in the South East property market, with plenty of opportunities on the horizon.