Why investing early in 2025 could be your key to a successful investment

December 30, 2024

Timing is one of the most important factors when it comes to investing. Get it right and the value of your investment can increase fast, but get it wrong and you could find yourself losing money.

However, indications are that investing early in 2025 will give you the best chance of investing successfully and maximising your returns.

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The housing market rebounded in 2024

Following two years where the average property price in the UK increased only very slowly if at all, 2024 was the year when UK property began growing steadily once again.

Inflation fell, the Bank of England cut the base rate of interest twice, and borrowing became more affordable.

That led to increased market activity, more buyers per available home and house prices approaching an all-time record high.

At the same time, the number of new homes built has fallen again while the number of renters has continued to increase.

That has caused rents to keep rising strongly, if not quite at the almost impossible pace seen in 2022 and 2023.

For investors, that made 2024 a great year. Both buy-to-let income streams grew and laid the foundation for a positive 2025.

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House prices and rents at record highs in the UK

House prices have risen twice as fast as incomes since the start of the century, but there is still lots more room for growth.

This is due to the lack of available supply and the extremely unlikely possibility that construction could ever meet demand.

We can see the effect of this in the latest house price news from Halifax. According to the lender, the average UK house price has now reached £298,083 as of November 2024 – a record high.

They have now risen five months in a row, and the pace of growth in November was the fastest of the year so far at 1.3% year-on-year. That is on top of this growth being the fastest since 2022.

Considering the end of the year is traditionally a quiet time for UK property, that is exceptional news and a good indicator of the demand that has built up in the market.

Now that borrowing is more affordable, that demand has an outlet and we are seeing house prices rise in response.

Amanda Bryden, head of mortgages at Halifax, said: “The latest figures continue to show improving levels of demand for mortgages, as an easing in mortgage rates boost buyer confidence.”

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2025 is the ideal time to buy UK property

That makes 2025 the ideal time to invest in UK buy-to-let property – and the earlier you do it the higher your potential returns.

Halifax and other lenders believe that more growth is coming early in the new year. The Bank of England and the new government have both signalled that interest rates will continue to be steadily reduced.

That will make borrowing more affordable, bringing even more people into the market.

The increased rates of Stamp Duty are another strong indication that the government expects house price growth in 2025.

Additionally, construction rates are low and there are a range of factors in the construction sector which make it unlikely that the government’s target of 1.5 million homes by 2029 will be feasible.

Even if the government does manage to deliver that many homes, it still will not be anywhere near enough to meet demand.

Therefore, those who invest early in 2025 will be able to earn the highest returns next year.

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Start of a new property cycle

However, UK investment property for sale is not just a short-term prospect. Its true value lies in the medium and long term.

In both cases, investing early in 2025 is the key to maximising your returns and enjoying a successful investment.

We are at the start of a new property cycle, and the latest forecasts from Savills show the profits that could be on offer with UK property over the next five years:

23.4% house price growth by 2029
17.6% rental growth by 2029

In some areas of the UK, returns could be even higher. Read about the UK’s best places to invest in 2025 here.

If you buy off-plan property it’s even possible to reduce your mortgage costs by making use of lower rates in the future when your property is completed.

Discover how investing off-plan can help save you money here.

Overall, this is a good time to invest in UK property and the data shows that those who invest early in 2025 will earn the highest returns over the next five years – whether you are investing as an individual, through a limited company or from overseas.

Want to learn more about UK property investment? Read more insights and get in touch with the team today.