House prices are rising as buyers race to avoid higher stamp duty bills, which could keep the market in good shape for at least the first quarter of 2025.
The housing market is set for a busy few months as buyers look to beat changes in stamp duty thresholds from April that will eventually push up the cost of buying a property.
But buyer sentiment could also be hit by economic uncertainty in the UK, a potentially slower pace of interest rate cuts due to higher gilt yields and the new Trump presidency in the US.
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House price data remains positive for now.
HM Land Registry’s latest report 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 February, but other sources such as the Nationwide House Price Index suggest prices rose by 4.7% in 2024 as a whole.
Nationwide’s chief economist Robert Gardner says house prices were “surprisingly resilient” in 2024, given the affordability challenges faced by buyers.
Going forward, he expects market activity to strengthen further as interest rates fall and affordability constraints ease, provided the economy continues to recover steadily.
Similarly, Zoopla believes interest rate cuts and rising wages will boost affordability, boosting buyer demand and prices.
Despite this, 2025 could be a tale of two parts with buyers rushing to complete transactions in the first three months of the year before stamp duty changes kick in.
Furthermore, most experts have scaled back the number of interest rate cuts they expect in 2025 as a result of the Autumn Budget and new inflationary pressures on the global stage. Fewer cuts in 2025 could mean mortgage rates fall more slowly than previously hoped.
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’s report is not yet available.
- Nationwide: House prices increased 4.7% on an annual basis in December.
- Halifax: House prices increased 3.3% on an annual basis in December.
- Zoopla: House prices increased 2.0% on an annual basis in December.
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%).
London was the only region with a negative annual growth rate (-0.1%) in November. 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 show that a record number of new sellers have come to the market since Boxing Day - up 11% annually.
Meanwhile the number of buyers contacting agents about properties for sale since Boxing Day is up 9% compared with the same period last year.
The number of sales being agreed over the same period is up by 11%.
Colleen Babcock, property expert at Rightmove, warns the increasing supply could make it harder for those looking to sell a property.
She 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?
Further interest rate cuts are expected in 2025. While this sounds like good news for the housing market, the outlook has been complicated by recent political and economic developments.
Inflation is expected to pick up again in the months to come thanks to rising energy prices, tax changes announced in the Autumn Budget, and potential tariffs from new US President Donald Trump. If inflation stays higher for longer, interest rates probably will too.
Some economists now think the Bank of England will only cut rates around four times in 2025 – less than previously expected. Market pricing looks even more conservative, with only two cuts forecast. This will probably mean mortgage rates fall more slowly than previously expected too.
In light of recent developments in the mortgage market, real estate consultancy Knight Frank has downgraded its forecasts for house price growth, but still expects prices to rise by 2.5% in 2025, 3% in 2026 and 3.5% in 2027. This is down from estimates of 3%, 4% and 5% previously.
Stamp duty changes could also dampen buyer demand later this year, as the tax-free thresholds are due to drop from 1 April. This means buyers will need to pay tax on any amount over £125,000, rather than the current threshold of £250,000. The first-time buyer threshold will revert to £300,000 (from £425,000).
We could see a surge in activity in the first three months of the year as buyers race to beat the deadline, with demand falling shortly after. Nationwide predicts a “period of weakness in the following three to six months, as occurred in the wake of previous stamp duty changes”.
Meanwhile, estate agent Savills has predicted that house prices will rise by 4% across the UK but said top-end properties will suffer, with investors being hit by extra stamp duty charges (such as the 5% surcharge on second homes) and changes to non-dom rules. It expects prime central London houses to fall in value by 4% in 2025.
Finally, on a regional basis, we could see a continuation of the north-south divide when it comes to house price growth.
Savills expects house prices to increase by 5.0% in 2025 in the North West, the North East, Scotland, and Yorkshire and the Humber. Prices in the East of England and the South West, however, are forecast to increase just 2.5% during the year.
Zoopla has forecast a 2.5% rise in average house prices this year.
Rightmove is forecasting 1.15 million transactions this year and predicts a 4% rise in asking prices.
We take a closer look in: “House prices: the regions tipped to see the biggest rise in 2025”.
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Zoopla: UK house price growth hits three-year high amid stamp duty rushZoopla's latest house price index reveals house price growth as buyers rush ahead to avoid avoid higher stamp duty bills from April
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