The supply of new properties coming to market is outstripping demand in many area of the country but with 5% more sales, and 11% more properties to buy, the prognosis for the property market after the end of March looks promising.
There is likely to be a stamp duty ‘hangover’ say Zoopla in their latest House Price Index (HPI) with London the hardest hit area; unsurprising given eight in ten first time buyers (FTBs) will pay SDLT in London after 31st March 2025, compared to less than half while the current thresholds are in place. FTB demand is sat at -3% compared to a year ago.
But London’s loss is the South East and the Midlands’ gain as ‘displaced’ FTBs look at markets with better value for money. And the demand and supply imbalance continues the further North you travel with SDLT threshold of £300,000 for FTBs still benefitting those in areas where average house prices remain below the threshold, despite increases over the past 12 months.
In Wales the ONS say average house prices are £209,579, an increase of 6% annually; in the North East prices are up 9% to £161,373; in the North West average prices are £210,259 up 6.8% annually; and in Yorkshire and The Humber they are £202,930, up 5.9% annually.
All of which means pressure on pricing remains. The Zoopla HPI shows static mortgage rates have reduced buying power and the return to higher rates of stamp duty from April means higher buying costs. With 80% of home owners, and 40% of first time buyers now falling into the SDLT thresholds, there may well be further price adjustments
As it is, Zoopla say house price growth is slowing with the annual rate 1.8% in February, down from 1.9% in January; with projections it will slow further in the coming months.
Office for National Statistics figures published this week say average UK house prices increased by 4.9% to £269,000, in the 12 months to January 2025. This annual growth was up from 4.6% in the 12 months to December 2024.
Commenting on the market outlook Richard Donnell, Executive Director at Zoopla, said the figures showed sales continuing to rise at a ‘steady pace’ adding house price growth will remain tempered by the additional costs of moving.
“A slowing in house price growth is not a major concern although the market needs some growth in prices to encourage sellers to come to market and buyers to make realistic offers on homes for sale. There is plenty of demand for homes but also lots of choice.”
Iain McKenzie, CEO of estate agency group The Guild of Property Professionals added the start of 2025 had seen the expected increase in activity but he remained optimistic the market would ‘absorb’ the adjustment
“While we may see a period of adjustment as the market absorbs the tax increase, improving mortgage rates and continued earnings growth are providing a solid foundation for sustained price stability. The outlook remains cautiously optimistic, particularly with the potential for further government support in the Spring Budget.”
“London and other high-value regions, in particular, are set to benefit from improved affordability, and we anticipate steady, modest price growth through the year. Despite ongoing economic headwinds, the housing market continues to demonstrate resilience, and we expect strong levels of sales activity to persist in 2025.”
If there was any further cause of optimism, Zoopla reminds we’re about to enter a busy selling period in the market as the months of March, April and May account for almost 30% of all homes listed for sale each year;
