There’s a quiet but noticeable optimism returning to the Herne Hill property market. After a year (or two) of economic uncertainty and hesitation, and despite all the negative energy being thrown around following the ending of the stamp duty holiday in March, signs suggest the tide has turned – at least, here in SE24.
And not just for current homeowners, but also for those house-hunters looking to move to our area – and not least for first-time buyers, too.
In a recent article I explored how the Herne Hill property market will feel the positive effects of the recent base rate cut on May 8th.
Today I want to expand on that, to widen the lens, to examine in a little more detail what else is fuelling the strength of this local market, and to decipher why the outlook for the rest of 2025 might be brighter than many predicted.
A few recent national headlines have turned their attention to the contribution of the so-called "Bank of Mum and Dad", as family support continues to play a crucial role in helping young buyers take their first step onto the property ladder. In some cases, this support is the difference between owning and renting, even between staying in the capital and moving elsewhere altogether.
But while intergenerational wealth is undeniably a factor, it’s not the whole story. A combination of improving mortgage conditions, stabilising interest rates, and a potential loosening of lending criteria may provide further support to first-time buyers – and of course, by extension, to the entire property market.
What do I mean by that? Simply, that no chain can begin without a first link to start it off, and first time buyers are often those who give us that.
When first-time buyers are locked out of the market, we feel it. Remember 2008? The difference between now and then is that in 2008, cash buyers swept in to purchase property for investment, which kept the lower end of the market alive (although deeply cut); today, investors are fewer and further between, and not here in numbers to start those chains off.
It can mean sellers struggling to find proceedable buyers, chains stalling, and overall transaction volumes beginning to decline.
Nevertheless, when the logjam breaks, when a first-time buyer steps in to purchase that one-bedroom flat or starter home from the first-time sellers looking to move up the ladder, it means the gears of the whole market begin to move again.
As mentioned in my article earlier this month, the Bank of England base rate was cut from 4.5% to 4.25% on May 8, 2025, widely reported as being positive for the market, particularly due to mortgage rates also coming down…
Ironically, the type of mortgage product rates people are most transfixed by – the 2 year, 3 year and 5 year fixed rate mortgages – haven’t changed greatly since May 8.
News headlines can talk about many mortgages falling by 0.25% (or more accurately, knocking 0.25% off their headline rate), because tracker rate mortgages will have done this – those being mortgages which ‘track’ the Bank of England base rate. A tracker rate mortgage that is ‘Bank of England Base Rate plus 0.75%’ will have dropped from 5.5% to 5.25%, for example.
Variable rate mortgages may also come down or may have done so already. These are more dynamic than fixed rate mortgages and tend to follow the pattern of what the base rate does, but it is at the discretion of the lender.
Nevertheless, many of these will have dropped by 0.25%, or be set to do so – or, if not by that exact amount, will be likely to drop by something similar.
This is useful therefore for homeowners running out of time on their existing fixed rate deal, who are set to fall onto their lender’s variable rate once their deal comes to an end. It is a problem that has been described as a mortgage timebomb, and so this is welcome news.
Nevertheless, we need to be measured about it, because the average variable rate at the moment is 7.74%, according to Uswitch – a long way yet from the 4.25% base rate.
What it all comes back to is those fixed rate deals that buyers and remortgaging homeowners have become so much keener on in the last two decades or so. Uswitch tells us that these are, on average, 4.79% for a 2 year fixed, and 5.04% on a 5 year fixed product.
But the landscape may be shifting.
Whilst it is true what I said earlier – that not much has changed in fixed rate mortgages since May 8th – financial markets are nevertheless increasingly pricing in rate cuts, and lenders are responding in kind.
The reason not so much has changed therefore since May 8th when it comes to fixed rate mortgages is because banks and lenders had already priced the latest cut in and acted positively, in advance.
Several mainstream banks are already offering fixed mortgage deals below 4% – mainly when a buyer is armed with a good deposit and no doubt scores well in terms of credit-worthiness.
This is significant because as borrowing becomes more affordable, buyer confidence increases – in fact, even when it is hints about affordability improving touching the news-pages again, buyer sentiment improves.
Those who were sitting on the sidelines late last year, worried about repayments, affordability criteria, or negative news headlines, are now beginning to return, spurred on by improved mortgages and armed with fresh agreements in principle – and possibly also with a more realistic outlook about the market and their buying power.
For anyone wondering whether it’s the right time to buy or sell a property in Herne Hill, the long-term data tells a reassuring story.
Despite market cycles, economic shocks, and changing buyer behaviours, bricks and mortar here has continued to perform.
According to the Rightmove analytics and wider historic Land Registry data, taking data in Lambeth as a whole as a gauge:
Consider what we’ve been through in the last 20 years: conflicts and natural disasters significantly disrupting international trade; the banking collapse of 2007; the crash of 2008 and the subsequent recession; Brexit; a global pandemic; two Trump governments upsetting the normal world order; the growth of crypto marketplaces; and even the death of monarchs…
Is it amazing that the value of property has continued to climb above inflation – which itself, as we are frequently reminded, has skyrocketed well above target on numerous occasions.
It isn’t just down to luck however – and least of all here in Herne Hill. It really does come down to some local fundamentals that remain unchanged: outstanding schools, strong transport links, a cosmopolitan vibe being here in the south of the city as we are, and a high quality of life for an urban environment.
The demand for homes in our area is deeply embedded. As new buyers enter the market at a time where new-building is limited, demand will only intensify.
If you’ve been holding back on selling due to economic jitters or market “noise”, now may be a good moment to revisit your plans. As first-time buyers return, they unlock a flow of activity up the chain, and that in turn leads to faster sales, greater competition, and stronger prices.
The Herne Hill market is outperforming many parts of London in some metrics, especially when it comes to its long term house price growth compared to other parts of the capital.
Our average property value is currently around £850,000, according to Rightmove; for detached homes here, make that an average price closer to £1.75 million.
The reality is, for better or worse, to buyers and home owners outside of the capital, prices like this feel weighty – and we recognise that. But nevertheless, a well-presented home, priced correctly, will attract motivated, proceedable buyers this summer.
It is rare to have alignment between sentiment, supply, and financing, but here in SE24 it feels like we may be approaching just such a balance.
If mortgage rates continue their gradual easing, which seems likely following the base rate cut on May 8th, given the expectation there will be at least a couple more this year according to economists, we will see a surge in activity across the board – from first-time buyers to downsizers, and everyone in between.
The fundamentals as I already mentioned, remain incredibly strong. The long-term picture is reassuring. And for those ready to move, conditions are tilting in your favour. We’re here at Petermans to help you navigate the local market here in Herne Hill – so whether you are early in the process and have questions, or are already primed and ready to go, we would love to hear from you.
We are required by law to conduct anti-money laundering checks on all those selling or buying a property. Whilst we retain responsibility for ensuring checks and any ongoing monitoring are carried out correctly, the initial checks are carried out on our behalf by Lifetime Legal who will contact you once you have agreed to instruct us in your sale or had an offer accepted on a property you wish to buy. The cost of these checks is £60 (incl. VAT), which covers the cost of obtaining relevant data and any manual checks and monitoring which might be required. This fee will need to be paid by you in advance of us publishing your property (in the case of a vendor) or issuing a memorandum of sale (in the case of a buyer), directly to Lifetime Legal, and is non-refundable. We will receive some of the fee taken by Lifetime Legal to compensate for its role in the provision of these checks.