UK housing market returns to growth as north outpaces south
Zoopla has predicted positive house price growth in all regions and counties of the UK in 2025, with the north expected to outpace the south.
The real estate platform has forecast sales growth at five per cent and house price growth at 2.5 per cent across the UK, with the fastest price increases in Northern Ireland and the North West.
Zoopla has predicted the growth “despite Budget headwinds”, although it said “affordability pressures” were an ongoing drag on house prices in the South East, where it predicted price growth of below one per cent.
“Postponed home moves, an ageing population, rising running costs and changing working patterns will continue to impact moving decisions, in addition to the desire to seek a better home or location.
“First-time buyers will remain the largest buyer group, supporting housing chains and helping existing homeowners to move,” Zoopla said.
This is despite the end of first-time buyer’s relief on stamp duty, which will see an additional 20 per cent of first-time buyers liable to pay.
Higher-than-expected income growth helps affordability
Wage growth has been higher than inflation recently, with household disposable incomes increasing by 15 per cent between the second quarter of 2022 and the second quarter of 2024, according to the Office for Budget Responsibility (OBR).
This has helped make houses more affordable without the need for additional support from a fall in house prices, Zoopla said.
Lower mortgage rates have also aided affordability, after sky-high rates in the last few years took house ownership out of the picture for many.
“Higher income growth and lower mortgage rates have helped reset housing affordability faster than many expected over 2024,” Richard Donnell, executive director at Zoopla, said.
“This has supported an increase in the number of sales and house prices over the year which we expect to continue over 2025,” Donnell added.
Matt Thompson, head of sales at estate agency Chestertons, said: “Other buyer demographics, including families, couples, professionals and downsizers considered 2024 a challenging year to buy a property amid political and economic uncertainty but now feel more motivated to resume their search in the new year.
“Contributing to the return of buyer confidence are lower interest rates, slightly more attractive mortgage products and the fact that the market has benefited from an uplift in the number of properties being put up for sale.”