Zoopla expects UK house prices to increase by 2.5 per cent over 2025 with an ongoing north-south divide resulting in lower house price growth in southern England and higher growth in other regions.
This is due to the relative affordability of housing across the country and how much house prices have risen relative to household incomes.
House prices in London have risen by 83 per cent since 2010, followed by 70 per cent across southern regions of England, 66 per cent across the Midlands and 56 per cent in Wales.
At the other end of the spectrum average house prices are just 19 per cent higher in Northern Ireland, 30 per cent higher in Scotland and 41 per cent higher in northern regions of England, providing room for house price growth.
The portal says the outlook for the housing market in 2025 will be dictated by the strength of the economy and labour market and the trajectory for mortgage rates, all set within the context of the relative affordability of homes across the UK.
Zoopla expects mortgage rates to remain at current levels and buyers are likely to remain price-sensitive in the face of increased uncertainty regarding the economy and the impact of the budget on the jobs market. Zoopla forecasts a 2.5 per cent increase in house prices over 2025 and 1.15m housing sales, up from 1.1m in 2024.
Richard Donnell, Executive Director at Zoopla comments:“Buyers and sellers returned to the housing market in 2024 having delayed moves in the face of higher mortgage rates. There is a sizable pipeline of sales that will complete in the first half of 2025 with many hoping to avoid higher stamp duty costs from next April.
“More sales have supported a return to house price growth across the country but home buyers have become more price-sensitive in recent weeks as mortgage rates drift higher. Affordability constraints will keep the pace of house price growth in check over 2025 but there will be enough price inflation to support 5% more home moves.”