House prices in the UK have seen a significant uptick over the past 12 months, with an average increase of 1.5%. This rise, according to property search website Zoopla, is expected to continue into 2025, with a forecasted 2.5% increase in house prices for the upcoming year. The north-south divide in housing prices is becoming more pronounced, with northern regions such as Northern Ireland experiencing a surge of 6.3% in house prices, while the southeast of England has seen a more modest gain of only 0.3%.
Richard Donnell, executive director at Zoopla, attributes this growth partly to stronger income growth than anticipated, coupled with a retreat in mortgage rates, making homes more affordable for potential buyers. Despite the overall positive forecast, Donnell notes that the southeast and London may face ongoing affordability pressures, causing these markets to lag behind their northern counterparts. Additionally, recent budget changes, such as higher stamp duty rates for buyers starting in April 2025, are expected to act as a drag on price inflation in the housing market.
Zoopla predicts that there will be approximately 1.15 million housing transactions in 2025, representing a 5% increase from the previous year, driven in part by the current busy market as buyers rush to complete transactions before the tax changes take effect. The number of sales agreed is already 19% higher than the previous year, with buyer demand increasing by 25% as buyers aim to beat the upcoming stamp duty rate increase. Despite these challenges, analysts remain cautiously optimistic about the growth potential of the UK housing market in the coming year.