House prices ‘gathering steam’ before stamp duty changes
The UK’s housing market got off to its strongest start in three years in 2025 as both demand and supply increased, according to new data.
Buyer demand was up 13 per cent and 10 per cent more homes were on sale, with rising sales supporting UK house price inflation of two per cent year on year, according to Zoopla.
“Prices are gathering steam, marking a significant turnaround from this time last year,” Sales Director at Finova John Tilzey said.
“[Prices have been] supported by falling mortgage rates, rising wages, and easing inflationary pressures – all of which have played their part in alleviating pressure on affordability.”
The appetite to move home now or in the next two years is “greater than a year ago”, Zoopla said, with 22 per cent of renters and 17 per cent of homeowners looking to buy.
“Fundamentally the UK property market thrives on confidence and positive sentiment,” Malcolm Prescott, managing director of Webbers Estate Agents, said.
“We are now seeing customers positively embracing property hearing that prices are set to rise… and affordability seems to be back given the more consistent mortgage interest rates,” he added.
Brits waiting for Stamp Duty changes
However, there are signs the recent uptick in prices will soon level out as mortgage rates rates and supply of homes both rise.
Plus, the rush to buy homes before stamp duty for first-time buyers kicks in this April will have somewhat distorted the new year market.
However, executive director at Zoopla Richard Donnell cautioned that the stamp duty change would have a disproportionate impact in higher-priced areas like London, with “three in five first-time buyers still paying nothing from April”.
“The extra costs to homeowners remain manageable and unlikely to reduce sales but they will keep price rises in check,” Donnell added.
Tom Bill, head of UK residential research at Knight Frank, said: “Demand in the UK housing market feels artificially high.”
“As well as the prospect of higher stamp duty from April, a number of borrowers are sitting on sub-four per cent mortgage offers that pre-date the Budget, which will support prices and transaction volumes in the first quarter of this year.”
As the impact of higher mortgage costs kicks, we expect a period of downwards pressure on house prices that will only be alleviated once rate cut expectations rise.
Matt Thompson, head of sales at Chestertons, added: “In January, the property market saw particularly high demand from first-time buyers who were motivated to beat April’s stamp duty deadline.”
“This spike in buyer activity led to the majority of properties exchange hands for the asking price although some sellers, especially those in a rush to sell, agreed to enter price negotiations. As there is still time to benefit from the current stamp duty threshold, we expect more first-time buyers to enter the market over the coming weeks.”
Kevin Roberts, managing director and Legal & General Mortgage Services, added that “we’re seeing an increase in market activity partly driven by a rise in first-time buyers looking to get on the ladder and older buyers returning to the market, who may be motivated to take advantage of the current Stamp Duty Tax thresholds.
“Our broker data shows that the volume of first-time buyers searching for mortgages has more than doubled since 2023, and this encouraging growth in borrower confidence may well continue this year.”
“The market terrain is altogether more stable than it was in 2024, and we could see more base rate cuts this year, bringing further relief to borrowers. However, navigating this market can still feel challenging, so buyers should consider speaking to a mortgage adviser to find the best deal for them, whether they’re looking to buy or remortgage.”