The U.K. housing market kicked off 2025 with its strongest start in three years, according to a report from property portal Zoopla. Leading into January, demand was up 13% and contracts up 12% compared to the previous year, as buyers rushed to complete sales before a new stamp duty rule takes effect in April.
The activity was especially high among buyers in England and Northern Ireland who will see the biggest impact from the removal of a tax benefit for first-time buyers. The new rule, confirmed by the October 2024 budget, will see stamp duty tax rise the most for properties valued between £300,000 (US$371,881) and £625,000.
Home prices also increased over the last year by 2% to a median £267,700 at the end of 2024, compared with a 0.9% decline the previous year. Every region of the U.K. saw price growth, with the greatest increase in Northern Ireland. Prices there rose 7.7% from a fairly low base, which was something of an outlier. The next highest growth was in North West Ireland, at 3.4%. In England’s Southern regions, price growth was below 1.5%, including in London, where prices increased 1.4%.
In terms of individual cities, prices were up the most in Belfast, by 7.9%, tracking Northern Ireland’s growth, followed by 3.6% in Manchester, England. But Edinburgh saw just 1% growth, compared with 2.8% inflation in all of Scotland.
While the changes to the stamp duty tax may have spurred some buyers, it appears that appetite isn’t quite waning even as the deadline approaches. Zoopla found that 22% of renters were looking to buy at the end of 2024, compared with 19% the previous year, and 17% of homeowners were looking to move, compared with 15% in 2023.
The demand is being met by rising inventory, which grew 10% between December 2023 and 2024. Prices are expected to rise another 2.5% this year and sales are expected to climb by 5% to total of 1.15 million, according to Zoopla.
The optimism is due to normalizing mortgage rates and rising incomes, the report said. “Housing affordability is slowly improving as mortgage rates stabilize in the 4%-5% range and earnings rise faster than house prices, a trend that has been running since December 2022,” according to the report.
