The UK housing market has always been subject to government policy announcements, outside forces of economics, and consumer confidence fluctuations. After a turbulent 2024, there is evidence that 2025 will provide more stability and growth—particularly in areas such as Coventry, where affordability, high demand, and improved financial situations are coming together to create a helpful background for sellers and buyers alike.
Easing Uncertainty and Growing Confidence
Following a year of unstable interest rates, a sluggish economy, and policy overhauls, confidence is returning to housing. High interest rates and speculation over the new Government’s taxation policy created much volatility that infiltrated the property market in 2024. However, with that ‘budget’ firmly in our rearview mirror, market forces are becoming more predictable. The housing market is sensitive to volatility, and so this certainty breeds higher confidence in buyers and sellers alike.
While the increase in National Insurance rates may slightly reduce hiring, this is more likely to affect lower wage roles, where individuals are more likely to rent privately rather than buy their own homes. The broader housing market is unlikely to see major effects, as demand remains strong and house prices are shaped by wider economic factors beyond changes in lower wage job numbers.
The expectation of diminishing mortgage rates in 2025 is a significant boost to this confidence. The year that just elapsed was one of volatility, in which rates failed to decline as forecasted. There is cautious optimism today that mortgage rates for buyers with decent deposits will stabilise at approximately 3% to 3.5% towards the year's end (you can get 4.1% with the Yorkshire Building Society today with a 60% loan to value mortgage). Even small reductions in the price of borrowing in the past have been found to profoundly impact transaction volumes, making them a primary driver of property market performance.
Stamp Duty and Market Stimulus
Another key driver of market behaviour is the stamp duty policy. The reintroduction of the zero-rate band to £125,000 (from £250,000) in April in England caused a short-term rush to make home purchases in advance in Q4 2024 (as seen in uplift in mortgage approvals, with November 2024 statistics recording a significant jump over the same November in 2023).
All of that aside, patterns of history indicate that a change in stamp duty has a short-term impact upwards, a slight drop in transactions immediately afterwards, after which demand stabilises when buyers adjust to new situations.
The Supply and Demand Imbalance of the Property Market
One of the most fundamental drivers of house prices across the UK is the persistent supply and demand imbalance. The UK's population grows predominantly through legal net migration, adding approximately one million per annum. House construction, however, has consistently fallen short of this demand over the last three decades. This scarcity keeps house prices up and keeps rents rising.
Coventry, like many cities, benefits from this dynamic. The city is attractive to home shoppers looking for more affordable homes, but supply is constricted. The constricted supply of homes for sale keeps buyers competing, helping to maintain house prices even in the face of broader economic headwinds.
The Resilience of House Prices
Despite periods of stagnation in the economy, house prices in most parts of the country have been resilient. The residential market is different to commercial property in that it is just a small percentage of housing stock that is on the market at any one time, and most homeowners are insulated from short-term price volatility. This has the effect of keeping overall price levels on an even keel, even when the economy is in poor condition.
Another factor supporting house prices is the long-held perception of property as a secure investment option. Compared to other investments that can be highly volatile, bricks and mortar have always provided a solid return, making homeownership a highly attractive option for homeowners and investors alike.
The Supply and Demand of the Coventry Property Market
Coventry remains a highly desired place to buy for those in need of decent schooling, transport links, relatively affordable housing, and easy access to a mixture of rural and urban amenities. The transport network is also a plus, particularly for those wanting to move in from more expensive areas. Chatting with my fellow estate agents in Coventry, many, like myself, report regular interest in homes from local Coventry residents as well as those moving in from more distant towns and cities. The affordability combined with demand means that the market is likely to be robust in 2025, even when national trends fluctuate.
As mentioned earlier, both demand and supply play a crucial role in the property market, but supply is often the bigger driver of long-term trends. With that in mind, it’s worth taking a closer look at what’s happening locally to understand how housing availability (supply) is shaping market conditions.
The number of homes for sale in Coventry (CV1-CV7) has increased in the last 3 years.
In January 2025, there were 2,615 properties for sale in
the Coventry area, compared to 1,534 in January 2022
This increase in the number of homes for sale is good news as it gives greater choice for buyers and encourages people to move (because there isn’t a lack of homes to move to – which was an issue in 2021/2).
However, some of you will say, this greater supply of homes for sale could affect house prices. Let me remind the homeowners and buyers of Coventry, that back in 2008 there were more than 4,184 properties for sale in the Coventry area, so we have an awful long way to go before we have too much supply and therefore Coventry house prices dropping (like they did by 16% to 19% depending on type of Coventry home you owned).
Looking Ahead in Coventry
While economic instability and policy reforms will continue to affect the property market, underlying demand drivers remain strong. The supply and demand gap, interest rates drifting downwards (albeit rather slowly), and ongoing popularity of property investing all point to a stable—and possibly strengthening—market in 2025.
For prospective buyers and sellers in Coventry, this year holds challenges and potential. The first half of the year is set to see more action due to reforms in stamp duty, but in the long-term it looks set to be a strong market, particularly in areas that enjoy a high ratio of affordability to demand.
However, this is not a green light for Coventry homeowners to be unrealistic with their pricing.
Over the past two years, only 57.9% of homes listed for sale in Coventry have successfully sold, with their owners moving
The remaining 42.1% were withdrawn from the market unsold.
Knowledge of local marketplace dynamics is always key to making informed property decisions. With careful planning and a sound approach, sellers and buyers can weather the times of change and take advantage of the opportunities ahead.
If you’re thinking of moving sometime within 2025 and want to pick my brains with regard to where you stand in the property market, please do not hesitate to give me a call.