"2025 has started well, better than 2024 and 2023 which bodes well for market activity over the rest of the year, supported by evidence of more people looking to move."
- Richard Donnell, executive director at Zoopla
The 2025 sales market has got off to a stronger start than in 2024 or 2023 with buyer demand up 13% and 10% more homes for sale, the latest figures from Zoopla show.
The momentum in sales market activity that built up over 2024 has run into 2025, despite concerns over mortgage rates drifting higher and a softening in UK consumer confidence.
New sales agreed are up 12% year-on-year as some buyers attempt to avoid paying higher stamp duty from April this year.
The annual rate of UK house price inflation is running at 2%, up from -0.9% a year ago, with sales growth supporting modest price gains. This is the highest level of house price growth since April 2023. The average UK house price is £267,700, an increase of £5,200 over 2024 following a £2,400 decline over 2023.
The fastest growth in average house prices is in Northern Ireland (7.7%), where prices are rebounding off a low base, followed by North West England (3.2%).
House prices are rising more slowly in southern England where prices are above average and it is taking longer for rising incomes to help reset housing affordability. House prices have risen by less than 1.5% in London, the South West, South East and Eastern regions of England over the last 12 months.
There are signs that the recent upturn in prices is starting to level out as mortgage rates drift higher and buyer choice increases. Zoopla says this will keep price inflation in check over 2025 but the current North-South divide in home price inflation is expected to continue over the year ahead.
Higher stamp duty from April boosts demand in key price bands
The Autumn Budget confirmed that temporary reliefs from stamp duty will end in April 2025 in England and Northern Ireland. As a result, first-time buyer demand jumped by over a third in November and December 2024 in the price bands where stamp duty for first-time buyers will increase the most from April 2025, between £300,000 and £625,000. The greatest savings are to be had by first-time buyers looking to buy in London and higher value areas of South East England.
First-time buyer demand increased more slowly below £300,000, where first-time buyers will continue to pay no stamp duty, and over £625,000 where there remains no tax relief from stamp duty for first-time buyers.
It is now too late for first-time buyers to agree and complete property purchases before the end of March 2025 and pay lower stamp duty. However, it is a positive sign that first-time buyer demand remains higher year-on-year, in line with the wider market. "Concerns over a possible cliff edge in home buyer demand after April are overdone", Zoopla believes.
Homeowner demand also increased in response to the stamp duty changes albeit to a lesser degree.
Increase in households looking to buy in 2025
While the ending of stamp duty relief has provided a boost to market activity in recent months, there remains an increased appetite amongst UK households to move home in the next two years.
Zoopla’s data shows there has been an increase in the proportion of households looking to buy amongst renters and existing homeowners compared to a year ago. This is due to households delaying decisions in the face of higher mortgage rates in recent years, expectations that base rates will be cut in 2025 and rising incomes will further improve affordability.
Over a fifth of renters want to buy a home having seen the cost of renting rise rapidly over the last two years. Renters buying homes are the driving force for the first-time buyer market which will be the largest buyer group once again in 2025.
Just under a fifth of homeowners want to move in the next two years while a quarter have no immediate plans to move and are keeping a close watch on the market should circumstances change.
Richard Donnell, executive director at Zoopla, commented: “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, supported by evidence of more people looking to move.
“It is important not to read too much into the increase in stamp duty for more buyers from April as three in five first-time buyers will still pay nothing from April. The extra costs to homeowners remain manageable and unlikely to reduce sales but they will keep price rises in check.
“The healthy stock of homes for sale will keep price rises in check and we are forecasting average UK house prices will rise by 2.5 % in 2025 with 5% more sales than last year at 1.15m. Rising incomes and base rate cuts will improve affordability and support consumer sentiment.”
