Buyer demand rises as stamp duty changes drive early-year activity
The UK housing market has begun 2025 with solid momentum, according to a Zoopla report, which indicated that new sales agreed have risen 12% year-on-year, as some buyers move quickly to avoid higher stamp duty rates set to take effect in April.
Market activity that gained traction throughout 2024 has carried into the new year, despite concerns about rising mortgage rates and a dip in consumer confidence.
The number of homes for sale is also up by 10% compared to early 2024, with estate agents now listing an average of 31 properties per branch—the highest in seven years. Increased supply has fuelled demand, with buyer interest 13% higher than at the same point last year.
House prices are also experiencing modest growth, with the UK’s annual house price inflation now at 2%, up from -0.9% a year ago. According to the latest Zoopla House Price Index, the average property price stands at £267,700, reflecting a £5,200 increase over 2024 after declining in 2023. The strongest price growth is occurring in more affordable regions, where job creation has outpaced the national average.
Northern Ireland leads with a 7.7% annual price increase, followed by North West England at 3.2%. Local markets in Wigan (5.6%) and Motherwell, Scotland (4.9%) are among the fastest-growing. Meanwhile, southern England, where prices are already high, has seen slower gains of under 1.5% in London, the South West, South East, and East.
While house prices have rebounded, the upward trend appears to be moderating as mortgage rates edge higher and an ample supply of homes tempers inflation. The north-south divide in price growth is expected to persist throughout 2025.
Zoopla also noted that the upcoming end of temporary stamp duty relief in England and Northern Ireland has prompted a surge in first-time buyer activity, particularly in the £300,000 to £625,000 price range. First-time buyer demand jumped by over a third in November and December 2024, with the most significant tax savings in London and the South East.
However, those who have not already secured a purchase are unlikely to complete transactions before the April deadline. Despite this, first-time buyer interest remains higher than a year ago, easing concerns over a market slowdown post-April.
Existing homeowners have also responded to the tax change, but the financial impact is less pronounced for this group. From April, first-time buyers purchasing a £420,000 property in London will see stamp duty rise from £0 to £6,000, while those buying in the South East (£332,500) will face an increase from £0 to £1,625.
Beyond the short-term effects of the stamp duty change, long-term buyer demand remains strong. Zoopla’s Monthly Consumer Tracker shows an increasing number of renters and homeowners planning to buy. More than 20% of renters are looking to purchase, as rising rental costs push them toward homeownership.
Richard Donnell, executive director at Zoopla, said the early weeks of 2025 suggest a positive outlook for the market.
“2025 has started well, better than 2024 and 2023, which bodes well for market activity over the rest of the year, supported by evidence of more people looking to move,” he said.
“The healthy stock of homes for sale will keep price rises in check, and we are forecasting average UK house prices will rise by 2.5% in 2025 with 5% more sales than last year at 1.15 million. Rising incomes and base rate cuts will improve affordability and support consumer sentiment.”
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