UK House Prices Climb at Fastest Rate Since April 2023 – What’s Driving the Market?

The UK housing market has entered 2025 with renewed momentum, showing the strongest price growth in nearly two years. According to the latest data from Zoopla, annual house price inflation hit 2% at the end of December 2024, doubling from 0.9% a year earlier. The average UK house now costs £267,700, representing a year-on-year increase of £5,200.

📈 Northern Regions Power Ahead

The North continues to lead the property price race, with Northern Ireland seeing the highest growth at 7.7%, followed by the North West of England at 3.2%. Local hotspots like Wigan (5.6%) and Motherwell (4.9%) are seeing particularly strong increases, suggesting renewed interest and investment in regional towns.

Meanwhile, price growth in Southern England remains more subdued, with annual inflation below 1.5% in many areas. This regional divide reflects broader economic trends, as employment growth in Scotland, Northern Ireland, and the North West has outpaced that of the South over the past two years, helping to sustain buyer demand and confidence in these areas.

🏘️ Market Activity at a 7-Year High

It’s not just prices that are heating up—the property market is also seeing a noticeable rise in activity. There are now 10% more homes for sale than this time last year, with the average estate agent listing 31 properties, the highest January figure since 2018.

Buyer demand is up by 13%, and sales agreed are 12% higher than this time last year, fuelled in part by a rush to complete purchases before the Stamp Duty threshold reduction takes effect in April 2025. Currently, properties up to £250,000 are exempt from Stamp Duty, but from April, this threshold drops to £125,000, prompting many buyers to accelerate their decisions.

🔮 What to Expect in 2025

According to Zoopla forecasts, house prices are expected to rise by 2.5% this year, with a projected 5% increase in the number of transactions compared to 2024. This growth will be underpinned by a combination of factors:

• Falling mortgage rates as lenders compete for new business

• Stable or rising wages, improving affordability

• Potential base rate cuts from the Bank of England, further reducing borrowing costs

The market is expected to remain active well into spring and summer, especially if favourable economic conditions continue.

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