The residential property market is set to undergo significant changes in 2025, driven by macroeconomic factors influencing consumer behaviour and investment strategies. These changes were detailed by Jennette Siebrits , Head of Research at CBRE UK, at the 19th Land Development, Planning and Construction Conference and Exhibition, organised by Exness .
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Impact of economic recovery on demand
As the economy gradually recovers in 2025, consumer confidence is strengthening. This, in turn, is driving up demand for residential property. Lower inflation, driven by falling energy prices, is having a positive impact on affordability. However, core inflation remains stable, creating additional challenges for the market.
Particular attention is paid to the impact of changes in energy prices, including rising natural gas prices. Such factors can affect construction costs and capital expenditures, which in turn will affect the final cost of residential real estate to buyers and renters.
Trends in the real estate rental market
Increasing inflationary pressures in recent years have led to rising rental rates for luxury residential properties. Although the market is gradually stabilizing, rentals continue to be a profitable tool for investors, especially in the premium segment.
The Role of Interest Rates
The reduction of key interest rates is becoming one of the main factors influencing the investment attractiveness of residential real estate. Despite the general reduction of rates, long-term interest rates may remain at a higher level. This creates both problems and opportunities for investors, allowing them to adapt their strategies depending on the economic situation.
Political and economic risks
Political and economic instability remains one of the main risks for the residential real estate market. Restrictions on investment due to high levels of uncertainty could slow down the sector’s development. However, a reduction in international tensions and reduced pressure on defense budgets could have a positive impact on demand and investment activity.
Investors are advised to closely monitor market developments, assessing risks and opportunities. The expected stabilization of macroeconomic conditions contributes to the increasing attractiveness of residential real estate, both for rent and for purchase, especially in areas with high demand and limited supply.
