What’s on the horizon for new homes buyers in 2025?

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What’s on the horizon for new homes buyers in 2025?

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With the spring market in full swing, are more people setting their sights on moving into a brand-new home?

According to the latest NHBC survey, there was a noticeable increase in new build sales activity at the end of 2024. With a net reservation score of +46, significantly above the December average of 0, it’s clear that buyer sentiment was improving. Site visitors also showed more positivity than in 2023.

The main challenges facing would-be home movers are delays and chains, followed by mortgage rates and concerns around overall buyer confidence. The impact of these factors has lessened compared to the summer of 2024, suggesting that confidence in the market is on the rise. However, volatility in the stock markets and uncertainty over the US approach to trade tariffs is likely to mean the continuation of a price-sensitive market.

Meanwhile, housebuilders are more optimistic about the future, with a positive balance score of +41 in December 2024, far exceeding the seasonal average of +26. This uptick in optimism was reflected in the sales rates, which reached their highest point in over two years, with major housebuilders reporting just over 0.6 sales per outlet per week. These sales rates are now in line with pre-Help to Buy levels, and unless we see a new demand-side scheme or improvements in affordability, they are expected to stay at this level. To aid affordability and further drive sales, some developers, including Persimmon, have introduced their own deposit boost schemes.

What’s the situation with new homes supply?

Despite this optimism, the supply of new homes remains a pressing concern. The year 2024 saw the lowest number of new homes completed in a 12-month period since 2017 (excluding the impact of Covid). According to Energy Performance Certificate (EPC) data, only 217,911 new homes were completed in England and Wales last year, down from 231,000 in 2023 and over 253,000 in 2022. This marks the fourth consecutive quarter of declining annualised completions. In Scotland, 19,797 new homes were completed in 2024, down from 21,238 in 2023 and 23,418 in 2022.

The government is making moves to address this issue in England, with a significant overhaul of planning policy aimed at speeding up the planning process and boosting housing delivery. However, these changes will take time to have a significant impact. While construction starts and planning consents have shown signs of recovery, they still fall short of housing targets, meaning the shortage of new build homes will likely persist. Meanwhile, housing completions in Edinburgh and Glasgow have also fallen short of the minimum required by Scotland’s National Planning Framework 4.

Looking ahead: What’s next for the housing market?

Looking further into 2025 and beyond, Savills projects UK property values to increase by 4% by the end of 2025, with a total growth of 23.4% over the next five years. This anticipated growth is largely driven by steady cuts to the base rate, which should help improve affordability.

The strongest regions for growth are expected to be in the North of England and Scotland, with the North West forecasted to see nearly 30% growth over the next five years. Meanwhile, rental growth, which has been robust in recent years, is expected to moderate and align more closely with income growth, reaching 17.6% over the next five years.

For potential new homebuyers, it’s a time of cautious optimism. While there are still hurdles to navigate, improving sentiment and ongoing changes in policy and affordability could present new opportunities for those looking to secure their next home.

 

Further information

Contact Sophie Tonge or Faisal Choudhry

 

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