Zoopla: House price growth 'now positive across all regions
Despite the widely predicted negative impact of last month's Autumn Statement, Zoopla forecasts that house prices and sales volume will grow further in 2025.
The forecast edition of the latest House Price Index from Zoopla, has revealed that house prices and sales volumes are set to grow by 2.5% and 5% over 2025, respectively, with all regions and countries of the UK currently seeing positive house price growth.
Zoopla's latest data also shows that the average UK house price currently stands at £267,200 having increased by 1.5% over the last 12 months (an increase of £3,900).
A return to growth
The housing market returned to growth in 2024, with UK house prices recording average growth of +1.5% in the 12 months to October 2024, up from -1.2% a year ago.
All regions and countries across the UK have recorded positive year-on-year growth, with the fastest price gains registered in Northern Ireland (6.3%) and the North West region (2.9%).
House price growth remains below 1% across southern England where affordability pressures are an ongoing drag on the scale of house price growth.
Housing sales to increase by another five per cent over 2025 to 1.15m sales
Sales agreed over the last four weeks are currently up 19 per cent year-on-year, with buyer demand 25% higher over the same period. The sales market is on track for 1.1m sales completions over 2024 - 10% higher than in 2023.
Sales completions over 2025 will be supported by a robust sales pipeline, 30% larger than this time last year, which is expected to deliver a strong start in the first few months of next year.
Zoopla expects the number of sales to increase by 5% over 2025 increasing to 1.15 million. Postponed home moves, an ageing population, rising running costs and changing working patterns will continue to impact moving decisions, in addition to the desire to seek a better home or location.
First-time buyers will remain the largest buyer group, supporting housing chains and helping existing homeowners to move.
Higher than-expected income growth repairs housing affordability
Rising incomes have helped to reset housing affordability over 2024 in the face of higher borrowing costs.
Data from the Office for Budget Responsibility (OBR) shows household disposable incomes increasing by 15% between 2022 Q2 and 2024 Q2. House prices grew by just 1.5% over the same period, a trend that has helped to repair housing affordability without the need for additional support from a fall in house prices.
Last year Zoopla reported that UK homes were over-valued by 16% as a result of the jump in mortgage rates. Rising incomes and lower mortgage rates over 2024 have removed this over-valuation without the need for prices to fall further in 2024.
This means the housing market has largely adjusted to higher mortgage rates, opening up the opportunity for continued modest growth in house prices which are expected to increase by 2.5% over 2025 assuming mortgage rates average 4.25% over the year ahead.
North-south divide on housing affordability will remain in 2025
The north-south divide in house price inflation will remain over 2025, a continuation of current trends. Affordability and access to housing are better outside southern England where the income to buy remains high and a drag on house price inflation.
This north-south divide is evident at a local level with the fastest price rises being registered in the Oldham (OL, 3.7%), Wigan (WN, 3.9%), and Belfast (BT, 6.5%) postal areas. In contrast, modest price falls are still being recorded in pockets of southern England led by Ipswich (IP, -1.1%), Truro (TR, -1.2%) and Dartford (DT, -1.2%).
Incomes will need to grow faster than prices to improve affordability, with house prices likely to grow in southern England over 2025 and into 2026.
Richard Donnell, Executive Director at Zoopla comments: “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.
“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.”
