Last week, the Bank of England reduced its interest rate to 4.5%—the third cut in under a year. This move, following a previous reduction in November 2024 (after a steady December), is viewed as a positive signal for the housing market. While most policymakers supported the cut, a few favored a deeper reduction to 4.25%, reflecting ongoing economic uncertainties. Lower borrowing costs are expected to enhance affordability, boosting confidence among homebuyers and those looking to remortgage, even though mortgage rates may not fall immediately as lenders adjust gradually.
Impact on the UK Property Market
The recent rate cut is already showing positive effects in the property sector. In January 2025, 98,978 UK homes went under contract—up 17.2% from 84,509 in January 2024 and a significant increase compared to 70,277 in January 2023. This uplift underscores the market’s resilience and the potential for further improvements in affordability as the year unfolds.
Regional performance varied across the country. For instance, the North West saw sales rise from 9,773 in January 2024 to 11,080 in January 2025. The East Midlands experienced the largest jump with a 27.5% increase, closely followed by East Anglia at 26.6%. London also performed strongly with an 18.1% increase, while the South East, South West, West Midlands, North East, and Yorkshire & Humber all reported healthy growth. Notably, Scotland’s sales increased modestly by 5.3%, whereas Northern Ireland saw a decline of 3.4%.
Lancaster’s Market
In Lancaster specifically—covering both the LA1 area and those parts of LA2 located within Lancaster—the property market is demonstrating impressive growth. In January 2023, 85 Lancaster homes were sold, with an average agreed sale price of £219,326. By January 2024, these figures had risen to 90 homes at an average price of £230,810, and in January 2025, 105 homes were sold with an average sale price reaching £272,197. This represents a year-on-year sales increase of 16.6% and a 23.5% rise compared to two years ago, underscoring the strong local demand. It was also interesting to note that more “higher value” homes sold in 2025.
What It Means for Lancaster Homeowners and Buyers
For those involved in Lancaster’s property market—whether buying or selling—a thoughtful, strategic approach is now more important than ever. The combination of falling interest rates and a competitive market environment means:
Sellers:
- Competitive Pricing: With properties taking longer to sell, setting the right price is crucial.
- Enhanced Marketing: High-quality video tours, targeted social media campaigns, and interactive listings can differentiate a property in a crowded market.
- Patience: The evolving market requires a strategic, adaptable approach, as sellers might need to wait a little longer to secure the best deal.
Buyers
- Mortgage Pre-Approval: Securing pre-approval can provide a competitive edge, especially in areas where demand is high.
- Expanding Your Search: Considering a wider area within Lancaster can uncover opportunities that might otherwise be missed.
- Negotiation Opportunities: In less competitive parts of Lancaster, buyers may have greater negotiating power regarding price and additional perks such as fixtures and fittings.
It’s also interesting to note that 81% of home sellers are simultaneously buyers!
Looking Ahead
As we move further into 2025, the outlook for the Lancaster property market remains a blend of opportunity and challenge. While the recent interest rate cut is set to lower mortgage costs further, sustained growth will ultimately depend on broader economic stability and how quickly lenders pass on these savings to consumers. For both first-time buyers and seasoned investors, staying informed about market trends and maintaining flexibility in strategy will be key to navigating this evolving landscape.
In summary, Lancaster—including the LA1 area and the relevant parts of LA2—continues to display robust activity and positive growth. The combination of improved affordability, strategic market adjustments, and overall resilience presents a promising picture for the future of property sales and prices in the region.
What are your thoughts on these trends? How do you see the balance of opportunity and challenge playing out in Lancaster’s property market in the coming months? I’d love to know your thoughts.
Thanks for reading
Michelle x
