Home sellers have been boosted by UK house prices hitting a record high and interest rate cuts, but there are fears that tax rises and economic uncertainty could dampen demand.
Predictions of house price declines failed to materialise in 2024, and the property market has started strongly this year. According to Halifax, house prices rose by 0.7% last month, with the average property now costing £299,138, a record high.
Meanwhile, the Bank of England has cut the base rate three times in just over six months helping to reduce the cost of borrowing.
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Last week (6 February), it reduced the base rate down from 4.75% to 4.5%. Experts are forecasting more interest rate cuts this year.
This has increased buyer purchasing power, leaving many homeowners to wonder if now is a good time to sell their property.
February and March are typically the best months to list a property for sale, according to research by the property portal Rightmove.
Another reason why selling a home now could be a smart move is because of the upcoming changes to stamp duty thresholds. From 1 April, the thresholds will drop to £125,000 for regular buyers and £300,000 for first-time buyers, potentially adding thousands of pounds to the cost of moving house.
But there are fears that tax rises announced in the Autumn Budget could dampen demand. There is also uncertainty over mortgage rates – last month, turmoil in the government bond (gilt) market pushed mortgage costs up – and concerns about the UK economy and inflation.
So, what does this all mean if you’re thinking of selling your home? It can be tricky working out if now is the right time to sell a property, especially in an uncertain housing market.
(If you’re thinking of buying a home, check out our guide to Is now a good time to buy a house?)
We explore what’s happening in the housing market right now, and things to consider if you’re planning to sell a house.
Is now the time to sell a house?
The answer to whether it’s a good time to sell a house comes down to your own personal situation, as well as the state of the housing market, plus economic forecasts – although bear in mind, these are just predictions and they could turn out to be wrong.
In terms of the current property market, house prices are rising, and mortgage rates look set to tumble this year.
Many buyers appeared to have been waiting for the 2024 Autumn Budget to pass and are now back in the market ahead of changes to stamp duty in April.
Some may have been waiting for another interest rate cut, and to see mortgage rates fall. A host of lenders including HSBC, Halifax and Barclays reduced the cost of mortgage deals last week.
According to Rightmove, February and March are the best months to list a home for sale, based on the likelihood the home goes on to successfully complete – closely followed by April and January.
Two-thirds of homes (66%) listed for sale in February and March since 2012 go on to complete the sale, the joint-highest months of the year.
February also has the joint quickest time to find a buyer on average historically, alongside January, at 51 days for a typical home to find a buyer, followed by March and April at 52 days.
Is the housing market slow?
In an encouraging start to the year for buyer activity, buyer demand is up by 8% compared with the same period last year, and the number of sales being agreed is up by 15%, says Rightmove.
The market is expected to accelerate further in the coming weeks as buyers look to beat changes to the stamp duty thresholds.
First-time buyer stamp duty relief is set to drop from £425,000 to £300,000 while home-movers will pay from £125,000 instead of £250,000. That is another factor that could motivate buyers to make a purchase sooner rather than later.
That could be a boost if you want to sell your home.
However, economic uncertainty in the UK on issues such as employer National Insurance tax rises could dampen buyer demand, and mortgage rates could actually rise if the Bank does not cut the base rate as expected this year.
Are you planning to step up or downsize?
The question of when to sell also depends on if you are buying another property at the same time – and whether that costs more or less than your current home.
Sarah Coles, head of personal finance at Hargreaves Lansdown, explains: “If you’re selling and buying at the same time, you can trade the loss of a premium on your property for being able to drive a harder bargain where you’re moving.
“The exception to this is for those who are downsizing."
Right now, with house prices rising, it could be a good time to downsize. This is because if both the home you’re selling and the property you’re buying have increased in value by, say, 5%, as the property you’re selling is worth more, you’ll make a bigger profit overall.
For those who are stepping up and buying a more expensive home, rising property prices could make the transaction more expensive.
However, house prices perform very differently in different parts of the UK, and also the type of home you’re buying, so you may find that house prices have not changed in the same way in both your local area and where you’d like to move to.
If you’re thinking of selling you’ll also have to consider the costs involved. This can include estate agent fees, legal fees, stamp duty and capital gains tax.
So, if you’re selling because you would like to free up some money, weigh up whether it will be worth it after costs.
Are houses selling?
The property market is moving, and property experts and estate agents believe the stamp duty rush should keep the market busy until at least the end of March.
Amanda Bryden, head of mortgages at Halifax, notes: “There’s strong demand for new mortgages and growth in lending. With a stamp duty increase looming, some of this demand may have come from first-time buyers eager to complete transactions before the end of March.”
If you are thinking of waiting a bit longer to put your home on the market to see if you can get a higher price, be warned that there are no guarantees with the future direction of the housing market.
Mortgage rates could drop lower – with some analysts predicting more rates below 4% in 2025 – and house prices could soar higher, but then again, they may not.
Coles adds: "If you’re planning to sell, waiting comes with risks. We can’t know when mortgages will get cheaper – or how far they will fall – so you don’t know how long you need to wait for.
"In any case, rates are likely to remain higher than we’ve been used to for a while yet. It means we don’t expect to get back to the intense sellers’ market of the pandemic boom, when properties flew off the shelves and sparked intense price wars."
According to Coles, the answer for those keen to sell now may be to make your property as appealing as possible, prepare your documents so you can move quickly, and price it realistically.
Holly Tomlinson, financial planner at wealth manager Quilter, notes that sellers can "enter the process with a little more peace of mind than has been possible in recent times".
However, she adds that property owners who do not need to move may still wish to hold off in hopes for lower mortgage rates in the longer term.
What’s happening with house prices?
UK house prices had been flatlining or falling for much of early 2024 amid high inflation and pricey mortgages.
But average values ended 2024 up 4.7%, according to the Nationwide House Price Index for December.
The Halifax index put the annual growth rate at 3.3% for 2024. These indices just cover the lender's mortgage book.
Figures from the more wide-ranging Land Registry, which cover all mortgaged and cash sales, show average prices rose 3.3% annually as of November 2024.
It also depends on where you look in the UK. Land Registry data suggests prices are growing at the fastest rate in Northern Ireland (6.2%), followed by Scotland (4.7%). Of the English regions, the North East is seeing the fastest growth (5.9%).
London was the only region with a negative annual growth rate (-0.1%) in November.
In terms of forecasts, Rightmove expects a 4% rise in asking prices in 2025. But that may not get reflected in sold prices.
Estate agency Knight Frank recently downgraded its forecasts for house price growth due to post-Budget uncertainty, but still expects prices to rise by 2.5% in 2025, 3% in 2026 and 3.5% in 2027. This is down from estimates of 3%, 4% and 5% previously.
Savills has forecast a 4% rise in average prices this year but warned that prime central London will be under pressure from higher stamp duty rates and the end of non-dom status. This has made the agent predict a 4% fall in average prices in prime central London.
Zoopla is predicting a rise of 2.5% in 2025.
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