Market recovery: Zoopla reports housing market regaining momentum
In the real estate market, predictions for the upcoming year suggest a **modest but steady growth in house prices** coupled with increased transaction volumes. According to the latest data, the average UK house price as of May 2025 stands approximately at **£268,400**, reflecting a modest annual increase of **1.4%** over the past year.
Expert forecasts generally anticipate annual house price growth in 2025 to range between **2% and 4%**. For instance, Knight Frank has revised its forecast upwards to around 3.5%, while Savills and other experts predict up to 4% growth in 2025 alone. Over a longer term (next five years), some forecasts expect a **5% to 7.5% cumulative increase**, driven by slow new home supply and underlying inflation pressures.
Price growth varies by property type; terrace and semi-detached houses are seeing stronger increases (about 2–2.5%), while flats have experienced slight declines recently.
Transaction volumes are expected to rise in 2025, with Rightmove forecasting approximately **1.15 million transactions** for the year, reflecting increased market activity. The market is being described as a "**buyer’s market**" due to increased stock availability, competitive pricing, and improved negotiating power for buyers.
The easing of mortgage rates, which remain elevated but have fallen from their 2024 peaks, along with anticipated Bank of England base rate cuts through 2025, might further stimulate buyer interest. However, affordability challenges remain, especially for those with smaller deposits.
Changes to stamp duty from April 2025, reverting thresholds to previous levels, are expected to temporarily boost market activity as buyers rush to complete purchases before higher costs apply.
Zoopla projects lenders to display innovation in affordability assessments in 2025, which should act to bolster demand for housing. However, the company doesn't expect mortgage rates to come down further in 2025.
In regional terms, house prices in Scotland increased 2.3% overall, with Aberdeen experiencing a 0.6% drop to £136,500. The South East saw the slowest rate of growth at 0.3%, while Belfast recorded a significant increase of 6.3% to £180,300. Ipswich, West London, and Canterbury also saw house prices fall. Across the whole of the UK, house prices increased 1.5% in the four weeks to 17 November, 2024, with Dorchester seeing the largest decline of any area, at 1.3%.
In conclusion, UK house prices in 2025 are expected to rise moderately, while sales volumes will increase, creating an environment favourable to buyers but with ongoing affordability pressures, especially for first-time buyers.
- With house prices predicted to grow between 2% and 4% in 2025, real estate investing could be a promising avenue for personal finance.
- Despite the modest increase in average UK house prices to £268,400, the housing-market remains unaffordable for many, particularly those with smaller deposits.
- The improving real-estate market, characterized by modest house price growth, increased transaction volumes, and a buyer’s market, is being partly driven by reduced mortgage rates and changes in stamp duty.
