UK Housing Market Surge: Stamp Duty Changes Set to Spark Growth in 2025

The housing market is expected to see a 5% increase in sales in 2025, reaching around 1.15 million transactions, with property prices also predicted to rise. This forecast comes from Zoopla, which anticipates 1.1 million property completions in 2024, a 10% increase compared to 2023. Key factors such as delayed home moves, an aging population, and shifting work patterns are expected to continue influencing homebuying decisions.

In recent weeks, demand from buyers and the number of sales agreed have already outpaced last year’s figures. Rising incomes are also helping the market adjust to higher mortgage rates. Zoopla expects modest house price growth to continue, predicting a 2.5% rise in property values across the UK in 2025, assuming mortgage conditions remain stable.

Regional Differences in Housing Price Growth

In the UK, some regions are expected to experience stronger growth than others. Regions such as the Midlands, Northern England, Scotland, and Wales are expected to outperform the national average. In contrast, the south of England, where affordability is a greater issue, is likely to see slower growth.

Meanwhile, Richard Donnell, Executive Director at Zoopla, points out that the housing market has shown resilience despite rising borrowing costs over the past two years. He adds that accelerating income growth and falling mortgage rates have made housing more affordable, leading to higher sales and prices - a trend that is expected to continue until 2025.

Donnell also noted that house prices in the South of England are likely to continue to lag behind the rest of the UK. In order for affordability to improve in the region, wages will need to rise faster than house prices, making it easier for more people to enter the market.

Although first-time buyers are likely to remain an important part of the market, those wishing to relocate will face additional obstacles. Indeed, many homeowners may have to look outside their immediate region to find better value for money.

Matt Thompson, Head of Sales at Chestertons, a London estate agency, has observed an increase in buyer activity as the end of the year approaches. This phenomenon is unusual for this time of year, and augurs well for a buoyant property market in 2025.

Indeed, one of the factors behind this development is the planned changes to stamp duty announced in the Autumn Budget, which will come into effect in April 2025. As a result of these changes, first-time buyers should be encouraged to act before the new rates come into effect, leading to a very busy start to the year.

Additional buyers, including families, professionals, and people in transition, who had postponed their move in 2024 due to economic and political uncertainty, now feel more motivated to resume their search in the new year.

In addition, lower interest rates, improved mortgage offers, and an increase in the number of properties available for sale are helping to boost buyer confidence.

UK House Price Growth by Region

Zoopla has also tracked house price growth across various UK regions over the 12 months leading up to November 2024. Here are the areas with the highest and lowest price changes:

• East Midlands: Nottingham (+1.8%), Lincoln (+0.3%)
• Eastern England: St Albans (+1.0%), Ipswich (-1.1%)
• London: Ilford (+1.6%), West London (-0.7%)
• North East: Durham (+3.7%), Teesside (+1.8%)
• North West: Wigan (+3.9%), Crewe (+1.9%)
• Scotland: Falkirk (+3.5%), Aberdeen (-0.3%)
• South East: Slough (+1.2%), Canterbury (-0.6%)
• South West: Plymouth (+1.5%), Dorchester (-1.2%)
• Wales: Swansea (+2.2%), Llandrindod Wells (+0.6%)
• West Midlands: Wolverhampton (+3.1%), Telford (+1.1%)
• Yorkshire and the Humber: Wakefield (+3.5%), York (+0.7%)

While Northern Ireland is not included in these numbers, it is part of Zoopla’s forecast for 2025.