House prices across the UK are higher than they were a year ago in every region, and are expected to continue to rise in 2025, despite potential dampening effects from recent Budget changes.
According to real estate search site Zoopla, average home prices have risen 1.5 percent over the past 12 months.
A clear north-south divide has emerged, with prices in the northern areas – which are generally more affordable – rising much faster than those in and around London, where property is more expensive and more sensitive to interest rate fluctuations. In Northern Ireland, house prices rose by 6.3 per cent compared to last year, while south-east England saw a modest increase of just 0.3 per cent.
Zoopla expects a 2.5 per cent increase in house prices over the course of 2025, in line with other industry analysts’ forecasts. “Income growth has been stronger than we expected” this year, commented Richard Donnell, CEO at Zoopla. Combined with falling mortgage rates, this has improved affordability for potential buyers.
In addition to the price hikes in 2025, Donnell estimates there will be 1.15 million housing transactions – an increase of 5 per cent compared to this year. However, affordability pressures are expected to persist in the South East and London, with southern housing markets likely to continue to lag behind their northern counterparts.
Donnell noted that his forecast for next year would have been more optimistic had it not been for the “budget changes,” which he believes would “act as a drag on price inflation.”
From April 2025, more buyers will face higher stamp duty rates. Zoopla estimates that about half of people moving today pay stamp duty, but this figure is expected to rise to more than 80 per cent in the spring. The percentage of first-time buyers required to pay stamp duty is likely to double from next April to 40 percent.
Zoopla data suggests the market is busier than usual as potential buyers aim to complete transactions before tax changes take effect. The number of agreed sales is 19 per cent higher than this time last year, and buyer demand is up 25 per cent.
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