London’s housing market is experiencing a slowdown in demand, attributed to a “stamp duty hangover,” according to a recent Zoopla report. As the new stamp duty changes loom, the impact on the capital's homebuyers is becoming evident, particularly among first-time buyers.
From April 2025, the stamp duty exemption threshold for first-time buyers in England and Northern Ireland will drop from £425,000 to £300,000. This shift is expected to affect around 80% of first-time buyers in London, a significant increase compared to the less than 50% under the current threshold.
The report findings suggest that, unlike other parts of the UK, the demand for London’s housing market is lower than a year ago. The report highlights that there has been a drop of 3% in buyer demand over the past year, with the most significant impact being felt by first-time buyers.
Many of these buyers rushed to complete their property purchases towards the end of 2023 to avoid the higher stamp duty rates, leading to a temporary lull in activity in the first few months of 2024.
The shift in the stamp duty rules has contributed to a broader slowdown in house price growth across the UK, which slowed slightly to 1.8% in February, down from 1.9% in January. The average house price across the UK is currently £267,500, with regional variations showing both drops and increases. Popular second-home destinations, like Truro in Cornwall and Torquay in Devon, have seen house prices dip.
In contrast, locations in northern England, Scotland, and the Midlands have experienced faster-than-average price growth, with areas like Motherwell, Kirkcaldy, Wigan, Blackburn, Lancaster, and Bradford seeing significant increases in house prices.
The report noted that the imbalance between demand and supply, particularly in northern England and Scotland, drives up prices in these regions. Demand in these areas is 10% higher than a year ago, while the supply of homes for sale is growing more slowly. This is resulting in price inflation above the national average.
Property experts predict that house price growth may continue to slow as the effects of the new stamp duty rules are fully felt. However, this market cooling is not seen as a major concern. Sellers in 2025 must be mindful when setting asking prices to attract serious buyers. The challenge for potential sellers will be to find the right balance in pricing their homes to generate sufficient interest.
As we head, potential sellers are encouraged to seek guidance from local estate agents to determine the most suitable pricing strategy for their properties. With many homes available, buyers have plenty of choices, but the key to a successful sale will be realistic pricing.
