“The first few weeks of each year tend to provide a clear indication of how the rest of the year is likely to unfold. 2025 has started well, better than 2024 and 2023, which bodes well for market activity over the rest of the year.”
– Richard Donnell, Zoopla

Newly released data from Zoopla reveals that the UK housing market has had a robust start to 2025, with new sales agreements up by 12% year-on-year. This surge is partly driven by buyers aiming to complete purchases before stamp duty changes take effect in April.

The number of homes for sale has increased by 10% compared to January 2024, marking the highest availability in seven years, with an average of 31 properties per estate agency branch. Buyer demand has also climbed, up 13% year-on-year, indicating a strong appetite for homeownership despite economic uncertainties.

House Prices Showing Steady Growth

The annual UK house price inflation rate now stands at 2%, recovering from -0.9% a year ago and marking the highest level of growth since April 2023. The average UK house price is now £267,700, a rise of £5,200 over 2024, following a £2,400 decline in 2023.

This renewed price growth reflects a more confident market as mortgage rates stabilise and demand remains high.

Regional Market Trends

While prices are rising nationwide, the fastest growth has been recorded in Northern Ireland (7.7%), followed by North West England (3.2%). In contrast, southern England, where affordability constraints remain, has seen slower price growth of less than 1.5% in London, the South East, South West, and Eastern England.

Zoopla’s data also highlights increased job growth in the North West, Scotland, and Northern Ireland, which is fueling demand and supporting property price increases in these regions. Among individual towns, Wigan (5.6%) and Motherwell (4.9%) have recorded the strongest local price growth.

Stamp Duty Changes Driving Early-Year Sales Surge

The Autumn Budget 2024 confirmed that temporary stamp duty reliefs in England and Northern Ireland will end in April 2025. This has triggered a rush among first-time buyers (FTBs), particularly in the £300,000 to £625,000 price range, where stamp duty costs will increase significantly.

For example:

• The average first-time buyer in London (£420,000) will see stamp duty rise from £0 to £6,000.
• The average first-time buyer in the South East (£332,500) will see stamp duty rise from £0 to £1,625.

As a result, FTB demand spiked by over 33% in November and December 2024, as buyers aimed to finalize purchases before these tax increases take effect.

While it is now too late for new buyers to complete purchases before the April deadline, experts believe that concerns over a demand drop-off post-April are overstated. First-time buyers remain the largest buyer group, and strong rental price growth continues to push renters towards homeownership.

Homebuyer Sentiment and Mortgage Market Trends

Zoopla’s Monthly Consumer Tracker shows that more UK households are planning to buy in the next two years.

• Over 20% of renters now want to buy a home, largely due to soaring rental costs.
• Around 18% of homeowners are considering moving within the next 24 months, while others are keeping a close eye on the market.

This shift reflects improved confidence in the property market as mortgage rates stabilize and potential Bank of England base rate cuts in 2025 improve affordability.

In response to these changes, lenders are adapting with new mortgage innovations. Barclays has launched its ‘Mortgage Boost’ product, allowing borrowers to add another person’s income to their mortgage application to increase affordability. This could help both first-time buyers and home movers navigate higher borrowing costs.

Expert Predictions for 2025

Richard Donnell, Executive Director at Zoopla, predicts that:

• UK house prices will rise by 2.5% in 2025.
• Housing transactions will increase by 5%, reaching 1.15 million.
• The stock of homes for sale will keep price rises in check.
• Rising incomes and potential base rate cuts will support affordability and buyer sentiment.

Toby Leek, President of NAEA Propertymark, states: “With the average house price rising and buyer registrations up 44% year-on-year, now is a great time to consider selling. The stamp duty deadline is also accelerating activity, as buyers aim to avoid potentially thousands in additional costs.”

Tom Bill, Head of UK Residential Research at Knight Frank, provides a cautious outlook: “While demand is high, part of it is artificially inflated by buyers rushing to complete before April. Many borrowers still hold sub-4% mortgage deals, which are keeping prices stable. However, higher mortgage costs later in 2025 could put downward pressure on house prices unless interest rate cuts materialise.”