"The further ahead of the game investors can be, the better, with plenty of additional sustainability and housing policies expected on the horizon, particularly under Labour’s Planning Reform and National Planning Policy Framework"
- John Howard - John Howard Property
As we move towards 2025, the UK property market remains under keen debate, with economic and policy changes resulting in unpredictable consumer behaviour. Despite these challenges, however, the sector continues to offer lucrative opportunities for growth, particularly for those guided by industry knowledge, who are likewise open to investing with agility.
Interest rate resilience
Interest rates rose to unprecedented levels in 2024, putting pressure on both the commercial and residential property sectors alike. Unfortunately, it’s a trend that will likely persist into 2025 and beyond, with the autumn budget, US election result and rise in inflation to blame to recent increases. The cost-of-living crisis adds greater weight here, but could - in fact - help to drive prices down, promising reward for market patience.
Even at times when interest rates are higher, there are still plenty of opportunities available for buyers with cash reserves or access to financing. It’s simply a matter of making use of available schemes or funds, perhaps turning to industry experts to prioritise investment in undervalued assets or less affluent areas primed for regrowth in order to minimise investment and maximise returns.
The ‘levelling up’ agenda
London’s dominance in the property market is now being challenged by regional cities like Manchester, Birmingham and Leeds, with Savills predicting that the UK regional prime property market will increase by almost 14% by 2028. This reflects a broader shift in urban relocation, driven by remote working and government investment in regional infrastructure – and promises a significant increase in property value for those able to purchase now whilst prices are lower and continue to rise.
Underdeveloped areas benefiting from the government’s ‘levelling up’ agenda – aimed at addressing regional inequalities by investing in infrastructure, housing, employment and education – are perhaps best for investment, as the equal access created is likely to generate improved living standards and future economic growth.
These areas will likely experience a spike in demand within the next few years, making them a prime focus for investors keen to expand their portfolios, generating promising returns, particularly for those willing to consider other types of properties, such as mixed-use developments.
Sustainability
In addition to exploring regional areas and diverse types of property, savvy investors will likewise look for sustainable buildings that allow for manageable improvements. As environmental concerns gain greater influence over property development and purchases, particularly given the introduction of stricter EPC regulations in 2024, it’s important to prioritise energy efficiency and renewable sources, among other solutions, in 2025.
This will protect both private residential and commercial landlords from compliance issues in the year ahead, furthermore giving them a competitive edge if their green refurbishments and certifications put them one step ahead of others in the market.
Policy changes on the horizon
In fact, the further ahead of the game investors can be, the better, with plenty of additional sustainability and housing policies expected on the horizon, particularly under Labour’s Planning Reform and National Planning Policy Framework (NPPF). As housing supply shortages are tackled, creating plenty of new opportunities to invest, the Government will simultaneously simplify planning laws, in addition to increasing funding for affordable housing, once again strengthening new development opportunities.
Buy-to-let investors should likewise prepare for potential tax reforms, safeguarding their finances through careful, guided planning, in order to remain competitive in this more equitable housing market.
What about AI?
Of course, there is plenty of emerging tech available on the market which can make seeking competitive opportunities easier, provided it is used with the right approach. Virtual Reality tours, for example, can help to determine whether prospective properties are then worth examining in person – though it would be ill-advised to replace in-person assessments and valuations completely.
Likewise, developers might use proptech platforms to assist with site analysis and acquisition, combining the insights gained with their own and/or external property and development knowledge. Ultimately, it’s a case of combining new technologies with human insight to boost the potential for identifying the best opportunities.
A year of opportunity
Whilst 2025 will present challenges, it is also ripe with opportunities for those who approach the market strategically. Success will depend on industry insights and expert guidance, helping investors to identify trends, assess risks and seize emerging occasions for growth.
