What’s happening with UK house prices? Latest property market moves explained

House prices recovered in 2024 and could get a boost from the upcoming stamp duty deadline. Will house prices rise or fall in 2025?

House prices as represented by 'for sale' and 'to let' signs on a terrace of properties
(Image credit: Getty Images)

The housing market is set for a busy few months as buyers look to beat changes in stamp duty thresholds from April. However, it is likely to be a year of two parts, with a corresponding slowdown in the housing market after those changes take place, pushing up the cost of buying a property.

For now, house price data is proving resilient. The latest report from HM Land Registry shows prices increased by 3.3% on an annual basis in November, bringing the UK average to £290,000. This is £10,000 higher than a year ago.

The official year-end figure for 2024 won’t be published until later in February, but other sources such as the Nationwide House Price Index suggest prices rose by 4.7% in 2024 as a whole, and 4.1% in the 12-months to January.

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Going forward, buyer sentiment could also be influenced by the broader economic outlook – including the direction of interest rates. There is still some disagreement about how many times the Bank of England will cut rates this year. This will play a big role in determining mortgage rates and affordability among prospective homeowners.

Until recently, markets were only pricing in two cuts in 2025, but investors are warming up to the idea that rates could now fall faster than this – particularly after two members of the Monetary Policy Committee (MPC) voted to cut the base rate by 50 basis points at their first meeting of the year on 6 February.

The Bank ultimately opted for a 25 basis point cut, in line with the votes of the other seven members. However, economists believe we could see around three more cuts before the year is out, as the MPC becomes increasingly concerned about stagnant UK growth.

Ryan Etchells, chief commercial officer at specialist property lender Together, called the February rate cut a “welcome shot in the arm for the UK housing market”.

We look at the latest developments in sale and asking prices, before delving into the outlook for house prices in 2025.

What's happening with sold house prices?

Sold house prices are the most accurate indication of what is happening in the UK property market – and HM Land Registry is the most authoritative source.

The only drawback is that the transactions this index measures may have been agreed several months ago. As a result, it is not always a good indication of current market conditions.

Major lenders like Halifax and Nationwide also publish trusted house price data, but this is based on the lender’s valuation at the mortgage approval stage. This can differ from the actual sale price, but the idea is that it is near enough to the end of the home-selling process to offer a more realistic snapshot than initial asking prices.

Property website Zoopla also publishes a house price index, which uses sold prices, mortgage valuations and data for agreed sales. We look at which house price index is best in further detail in a separate article.

What do the latest reports show?

  • HM Land Registry: House prices increased 3.3% on an annual basis in November. December and January’s reports are not yet available.
  • Nationwide: House prices increased 4.1% on an annual basis in January.
  • Halifax: House prices increased 3.0% on an annual basis in January.
  • Zoopla: House prices increased 2.0% on an annual basis in December. January’s report is not yet available.

Of course, there are big regional variations but 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.

Broadly speaking, the latest report from HM Land Registry suggests prices are growing at the fastest rate in Northern Ireland (6.2%), followed by Scotland (4.7%). Of the English regions, the North East is seeing the fastest growth (5.9%).

Meanwhile, London was the only region with a negative annual growth rate (-0.1%). Prices in the capital are particularly high, with the average house now costing more than £511,000. This suggests affordability limits have become stretched.

Separate data from Zoopla shows that half of the UK's 30 million homes increased in value in 2024, by an average of £7,600. This figure is up from the 10.6 million that increased in value over 2023.

The research also found a third of UK homes (9.2 million) recorded a price decline of one per cent or more over 2024. This was lower than the 12.8 million homes that saw a value decrease in 2023.

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’s house price index, based on asking prices, suggests house prices increased by 1.8% on an annual basis in January and by 1.7% on a monthly basis. This is the largest increase in asking prices for this time of year since January 2020.

Figures from Rightmove also show that a record number of new sellers have come to the market since Boxing Day – up 11% annually. The number of buyers contacting agents during this period has also jumped 9%.

Colleen Babcock, property expert at Rightmove, said: “The record number of sellers we’re seeing is a double-edged sword. It’s encouraging to see so many sellers with the confidence to come to market, providing buyers with fresh choice.

“However, with lots of homes for buyers to consider, sellers will need to work even harder to stand out from the crowd and attract a buyer.

"This could be with a tempting asking price, standout home features, immaculate presentation of the home, or a combination of all of these. It’s vital that in a competitive market, sellers take on the recommendations of their agent, particularly when it comes to setting a realistic price.”

Will house prices rise in 2025?

After boosting activity in the first three months of the year, stamp duty changes could dampen buyer demand from April. The tax-free threshold is due to drop from £250,000 to £125,000, and from £425,000 to £300,000 for first-time buyers.

The other thing to watch is interest rates. At the start of this year, markets were only expecting two cuts, but they are now warming up to the idea that the Bank of England could move faster than this. Economists at institutions like Goldman Sachs and ING are expecting roughly one cut per quarter throughout 2025.

There are risks to this outlook, though, including the possibility that US president Donald Trump imposes widespread tariffs, pushing up the rate of global inflation. Rising energy prices could also add fuel to the fire. Meanwhile, here in the UK, changes to employers’ National Insurance contributions (effective from April) could also push inflation up.

The Bank of England has now said it expects inflation to briefly hit 3.7% in the third quarter this year. If inflation heats up too much, it could limit the scope of interest rate cuts, potentially dampening the housing market by pushing mortgage rates higher too (not to mention denting household budgets).

Overall, real estate consultancy Knight Frank has said it expects house prices to rise by 2.5% in 2025, 3% in 2026 and 3.5% in 2027. Meanwhile, estate agent Savills has predicted that house prices will rise by 4% across the UK in 2025.

Naturally, there will be regional variations in the data. Savills expects a continuation of the north-south divide when it comes to house price growth, with prices rising more slowly in areas like London where affordability has become stretched.

The estate agent said it expects house prices to increase by 5.0% in 2025 in the North West, the North East, Scotland, and Yorkshire and the Humber. Meanwhile, prices in the East of England and the South West are forecast to increase just 2.5% during the year.

Finally, top-end properties in London are likely to experience a 4% drop in value, the agency said, as investors are hit by extra stamp duty charges (such as the 5% surcharge on second homes) and changes to non-dom rules.

Katie Williams
Staff Writer

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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