The UK’s property market is showing renewed vitality with residential property transactions surging in October, reaching 100,410 - a 21% increase compared to October 2023 and 10% higher than the previous month, HMRC data revealed last month
And looking ahead, Zoopla’s latest House Price Index suggests the positive trend could continue into 2025, despite challenges posed by Rachel Reeves’ recent budget. The average UK house price now stands at £267,200 - up 1.5% (£3,900) over the past year.
Return to growth
The housing market shifted back into growth mode in 2024 after a subdued 2023, with average house prices increasing by 1.5% in the 12 months to October - compared to a 1.2% decline the year before.
Regions like Northern Ireland (up 6.3%) and the North West (up 2.9%) led the charge, while southern England lagged, with price growth remaining below 1% due to ongoing affordability challenges.
Sales activity has also picked up significantly. Agreements over the past four weeks are up 19% year-on-year, driven by buyer demand rising by 25%.
Indeed, Zoopla projects 1.1 million sales completions in 2024 - a 10% increase from 2023 - with an additional 5% growth expected in 2025, bringing the total to 1.15 million. And a robust pipeline, currently 30% larger than last year, suggests a strong start to the new year.
Affordability issues
Rising incomes have been a key factor in stabilising the market. The Office for Budget Responsibility (OBR) reports a 15% increase in household disposable incomes between mid-2022 and late 2024. In contrast, house prices have risen by just 1.5% during the same period, repairing affordability without requiring significant price drops.
Meanwhile first-time buyers continue to play a pivotal role, underpinning housing chains and enabling existing homeowners to move.
Meanwhile, changes in work patterns, higher living costs, and an ageing population are reshaping moving decisions, with many seeking better homes or locations.
Zoopla suggests the housing market has largely adjusted to higher mortgage rates. Following a period of over-valuation – reported at 16% in 2023 – the combination of rising incomes and easing borrowing costs has helped realign property values. Average mortgage rates of 4.25% are forecast for 2025, with house prices projected to rise by 2.5% over the year.
Regional dynamics
The north-south divide remains a defining feature of the UK property market. Areas such as Oldham (3.7%), Wigan (3.9%), and Belfast (6.5%) have seen the strongest price growth, while parts of southern England, including Ipswich (-1.1%), Truro (-1.2%), and Dartford (-1.2%) are still experiencing small declines.
Southern England faces affordability constraints, with high income-to-buy ratios limiting house price growth. For the region to see sustained improvement, incomes will need to outpace price rises - a dynamic likely to play out over 2025 and into 2026.
2025 outlook
While affordability challenges persist, particularly in the south, the broader housing market appears well-positioned for modest growth.
Stabilised mortgage rates and rising incomes should continue to support activity, making the outlook for 2025 cautiously optimistic.
For buyers and sellers alike, these shifts point to a market that is evolving - if slowly - toward greater stability.
Richard Donnell, Executive Director at Zoopla, says: “The housing market has been resilient in the face of higher borrowing costs over the last two years.
“Higher income growth and lower mortgage rates have helped reset housing affordability faster than many expected over 2024. This has supported an increase in the number of sales and house prices over the year which we expect to continue over 2025.
“House price growth in southern England will continue to lag the UK average and incomes will need to rise faster than prices to help reset affordability and price more households into the market.”
And he adds: “First-time buyers will remain an important buyer group but existing homeowners looking to move will need more support to help realise their ambitions, with more and more having to look further afield to find better value for money.”
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