A record number of new sellers have entered the UK property market since Boxing Day, with average prices and agreed sales numbers also increasing, a report says, pointing to a busier 2025.

Property website Rightmove said in its monthly report that the average price of a property on the market rose by 1.7%, or £5,992, to £366,189 this month, the biggest rise in prices at the start of the year since 2020. While prices typically rebound in the New Year after seasonal declines in December before Christmas, this month's gains were significant.

It is understood that buyers feel more confident when bidding for homes due to falling interest rates. Official data showed inflation fell more than expected in November, to 2.5%, and interest rates are likely to fall sharply this year.

However, house prices are still almost £9,000 below the record in May 2024, reflecting affordability constraints for some buyers.

The number of new properties on the market has increased by 11% compared with the same period last year, the number of buyers contacting agents to inquire about properties for sale since Boxing Day has increased by 9% compared with the same period last year, and the number of sales concluded during the same period is up 11%.

The average number of homes listed for sale per estate agency branch is the highest for this time of year in a decade, with sellers competing to attract New Year buyers. Rightmove said some sellers may find they were too optimistic about their initial pricing and were left on the shelf.

"Rightmove property expert Colleen Babcock said new sellers had started the year hot. “We have also seen strong asking prices from new sellers this year, but given higher than expected levels of seller competition, we expect this to slow in the coming months.”

The company expects transaction volume this year to reach 1.15 million, with average asking prices rising 4%.

However, there are still uncertainties ahead, including the pace and number of rate cuts from the Bank of England and the impact of stamp duty changes from April 1, which affect smaller homes typically bought by first-time buyers.

First-time buyers in cheaper areas of England will be largely unaffected by the reduction in the tax-free threshold to £300,000 from April. However, Rightmove says that unless some additional help for first-time buyers is announced soon, rising stamp duty costs for buyers above the threshold will drag down higher-priced areas.

Mortgage rates remain relatively high, with fixed-rate deals below 4% all but disappearing in recent months. Rightmove's weekly mortgage tracker shows the average five-year fixed mortgage rate is currently 4.75%, little changed from 4.78% at this time last year. While the average two-year fixed mortgage rate has improved, it is still 4.97%, down only slightly from 5.08% last year.

After an unexpected fall in British inflation in December and weak economic growth in November, financial market interest rate expectations have shifted, with rates now expected to be cut by two or three quarter percentage points this year. A sell-off in UK and other government bonds ten days ago pushed up their yields (actually, interest rates), although those gains were later reversed in a roller-coaster week.

Tom Bill, head of UK residential research at estate agent Knight Frank, said: “Demand is likely to come under pressure in the coming months as rising borrowing costs impact mortgages. This is in addition to the pace of Bank of England interest rate cuts. "What happens in the bond market in the first few weeks of Donald Trump's presidency will also have a fairly direct impact on UK house prices this year."