What’s happening with UK house prices? Latest property market moves and forecasts
House prices dropped at the fastest monthly rate in almost four years in April thanks to tax changes, but property analysts claim the market looks resilient overall
Stamp duty changes put the brakes on the property market in April, with transaction volumes plummeting 64% in the month and house prices falling 2.7%, according to official figures published on 18 June.
Buyers and home movers rushed transactions through in the first three months of the year before the tax-free allowances dropped, resulting in a busy start to the year and a slow April.
First-time buyers now begin paying stamp duty once a home is worth more than £300,000, down from £425,000 previously. Meanwhile, home movers have seen the tax-free threshold drop from £250,000 to £125,000.
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The 2.7% slump in house prices was the biggest monthly drop in almost four years, but it “might not be anything to keep sellers up at night”, according to Sarah Coles, head of personal finance at investment platform Hargreaves Lansdown.
Coles points out that the drop was “always expected” in the aftermath of the stamp duty holiday.
“The sheer cost of property also kept a lid on price rises during the [stamp duty] holiday, so this wasn’t a steep climb and a dramatic descent. It was more of a gentle incline followed by a saunter downhill,” she added.
On an annual basis, house prices rose by 3.5% in the 12 months to April, down from a revised reading of 7% in the 12 months to March. It means the average property now costs £265,000, which is around £9,000 higher than a year ago.
HM Land Registry is the most authoritative source of house price data, but its reports are published with a six-week time lag. Other house price indices with more up-to-date data suggest the market has held up fairly well in the period since April.
Nationwide reported that prices rose by 0.5% on a monthly basis in May after falling 0.6% in April. The lender recorded annual house price growth of 3.5% during the month, up slightly from 3.4% in April.
Although Halifax reported a 0.4% drop in May following a “modest” rise of 0.3% in April, the bank’s head of mortgages said these “small monthly movements” pointed to a housing market that has remained “largely stable” in the wake of stamp duty changes.
Going forward, further interest rate cuts could help support the housing market, although there is likely to be regional dispersion with house prices rising more slowly in areas like London where affordability is stretched.
“Affordability remains a challenge, with house prices still high relative to incomes. However, lower mortgage rates and steady wage growth have helped support buyer confidence,” said Amanda Bryden, head of mortgages at Halifax.
Regional house price variations
Naturally, there are regional variations when it comes to house price growth.
Among the UK nations, prices are growing at the fastest rate in Northern Ireland (9.5% annually), according to the latest report from HM Land Registry. Scotland comes in second (5.8%), followed by Wales (5.3%) and England (3%).
Of the English regions, the North East is experiencing the fastest growth (6.4%). The South West saw the lowest level at 0.9%.
Using the “house prices in your area” report from the Office for National Statistics can help you understand how prices have changed in your borough or local authority area.
A recent special report from Nationwide also found that rural areas have outpaced urban areas in recent years. Between December 2019 and December 2024, house prices in predominantly rural areas increased by 23%, compared with 18% in areas that are largely urban.
“The pandemic had a significant impact on housing demand during 2021 and 2022, with a shift in preferences towards more rural areas, particularly amongst older age groups. Whilst these effects have now faded, less urban areas have continued to hold the edge in terms of house price growth,” said Robert Gardner, chief economist at Nationwide.
Are property asking prices going up?
Asking prices are a useful barometer for market sentiment as it currently stands. These snapshots tend to be published only a few weeks after the data was recorded. The drawback is that asking prices don’t necessarily reflect the final sold price.
Rightmove data shows asking prices dropped by 0.3% in the first few weeks of June – an unusual dip for this time of year – as new sellers lowered their price expectations against a competitive market backdrop.
London and other expensive southern regions saw the largest price drops this month, according to the property listing site. They are more exposed to stamp duty changes and have seen bigger increases in the number of homes for sale.
“It’s an encouraging market for those looking to buy, with a very good choice of homes for sale, which also means they have good negotiating power,” said Colleen Babcock, property expert at Rightmove.
“Some buyers with a home to sell in the current high-supply market may achieve a lower price on their own sale, but could look to offset that by negotiating a comparable discount on their purchase.”
While official figures show that property transactions plummeted 64% on a monthly basis in April and 28% on an annual basis, more recent figures from Rightmove suggest activity has bounced back since.
May saw the highest number of sales agreed in any month since March 2022, according to the property listing site, as properties marketed at the right price continued to attract buyers.
Will house prices rise in 2025?
Despite an uncertain economic backdrop, experts are cautiously optimistic about the property market going forward. Real estate consultancy Knight Frank recently upgraded its forecast from 2.5% to 3.5% for annual house price growth in 2025. Savills is predicting 4%.
Regional variations are likely, with prices forecast to rise more rapidly in the north than the south. Savills expects growth of 5% in the North West, the North East, Scotland, and Yorkshire and the Humber. Prices in the East of England and the South West are forecast to increase by 2.5%. This divergence can largely be explained by affordability.
“Housing market activity and house price inflation are currently strongest in areas where homes are more affordable. In broad terms, this covers most areas outside the southern regions of England,” said Richard Donnell, executive director of research at Zoopla.
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Katie has a background in investment writing and is interested in everything to do with personal finance, politics, and investing. She enjoys translating complex topics into easy-to-understand stories to help people make the most of their money.
Katie believes investing shouldn’t be complicated, and that demystifying it can help normal people improve their lives.
Before joining the MoneyWeek team, Katie worked as an investment writer at Invesco, a global asset management firm. She joined the company as a graduate in 2019. While there, she wrote about the global economy, bond markets, alternative investments and UK equities.
Katie loves writing and studied English at the University of Cambridge. Outside of work, she enjoys going to the theatre, reading novels, travelling and trying new restaurants with friends.
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