The property investment market is constantly changing and evolving, and in 2025 it is set to have a renewed sense of confidence in spite of a cautious start.
Many are predicting a promising outlook, whether you are investing in residential, commercial or rural site sectors, with annualised returns expected to rise up to as much as 7.4%.
With this in mind, it seems like 2025 is going to provide plenty of opportunity for those investors who are looking for healthy returns in a resilient property market, so here we share some of their forecasted investment trends that you can expect to see this year.
It seems the lettings market is going through a period of change and so this could present a number of opportunities for landlords and investors who are in a position to move quickly. There are a number of regulatory changes in the pipeline that investors need to be aware of, including the Renters Rights Bill and updates to the EPC requirements.
This could add expense to those accidental landlords or those who have smaller investments, potentially pushing them out of the market and creating new opportunities for any professional investors who are looking to take on new properties at more favourable prices.
There is still some uncertainty surrounding what the changes will mean in practise, but for investors who are capable of navigating the new relation regulations, there may be some long-term stable rental income to enjoy.
Demand for rental properties has been strong for some time, and this shows no signs of changing. Affordability constraints may affect the size of the rental increases that you will see throughout 2025, but this does not mean that the lettings market will be any weaker.
In fact, landlords are expected to benefit from strong tenant demand and long tenancy terms as long as they have focused on the enhanced tenant protections and compliance with the regulations.
Since COVID, we have seen a change in what buyers in the property market are looking for, and in 2025 it seems that lifestyle features will play a key role in this. Properties which most good transport links work from home space and outstanding school catchment areas will be in incredibly high demand.
The fact that materials and labour have risen in cost recently means that many are steering away from major renovation projects that could prove to be a money pit. Instead, they want attractive properties that are ‘move-in ready’ with only a few cosmetic updates to paintwork and carpets required.
As inflation levels have gradually got under better control, it seems likely that interest rates will be lower at some point in 2025. This will give investors greater levels of purchasing power, and existing homeowners are more likely to let go of their current low interest mortgages and take on a new property in order to benefit from the favourable rates. However, it still remains to be seen what policies from the new Labour government will look like in relation to taxation and regulatory reform, and so it is likely that the Spring Budget will reveal a clearer picture.
Property investment is usually seen as a sound place for your money as overall your property is likely to increase in value, and 2025 is not going to contradict this. The increased buyer demand that is being seen all over the country will continue to push house prices higher, although these increases may be more modest than we have previously seen.
With more growth forecast in the next few years, this means that many property investors are likely to see a return on their money in the near future.
Choosing to invest in property is one thing, but getting the right area is quite another. London was once seen as the centre for all investment property, however, these days it does not perform as well as other parts of the country, although it does still boast a very resilient market.
It is predicted that residential buy-to-let properties in the North West will lead the way in capital value growth. This means the traditional areas of the Northern Powerhouse, such as Manchester and Liverpool, will still be areas of interest for wise investors looking for buy-to-let investments.
Further South, regions such as Cheltenham, Somerset and Kent are all predicted to be strong performers. This is because buyers are looking for properties that are capable of balancing their investment potential with the lifestyle benefits of these more picturesque and desirable areas.
The quality schools, excellent transport links and general appeal of these counties plays a significant part in making them very popular.
It seems that the start of 2025 is likely to see a lot of activity, with buyers rushing to secure properties before the end of the current stamp duty incentives. The political uncertainty and economic challenges of 2024 helped to slow market activity, but now that greater stability is on the horizon, it’s likely that transactions will start to increase.
This means investors may want to move quickly in order to secure the right property. However, it is worth remembering that there are still some significant transaction delays, that can mean it is taking as much as three months to progress from agreement to exchange.
This is due to slower mortgage approvals and complex conveyancing processes and investors should also bear in mind that search times will vary according to the different regions.
The start of 2025 has seen some cautious optimism, but it looks as though there are strong opportunities for property investors across the UK over the next 12 months.
This is because we are still in a period of income stability, long term capital growth and increasing investor confidence, so now is the time for investors to diversify portfolios and explore the different opportunities that are currently on offer in the UK property market.
