"Now the uncertainty has lifted, we expect a stronger than usual start to 2026 as buyers return to the market"
- Richard Donnell - Zoopla
Housing sales hit 1.2 million over 2025 despite a fourth-quarter budget slowdown, according to Zoopla's latest House Price Index, marking the housing market's strongest year for sales in three years with 9% more home moves.
Stability in mortgage rates and stronger growth in household incomes have encouraged more home moves in 2025. The increase in housing sales has been stronger than expected, with the market on track for 1.2 million transactions over 2025. This is 9% higher than last year and in line with the 10-year average.
Although more home moves represent a positive development, this is not translating into faster levels of house price growth. Average UK house prices now stand at £270,300, 1.1% higher than a year ago (November 2025). This is lower than the 1.9% increase over 2024 and well below the 3.8% annual average over the last 10 years.
The market is locked in a north-south divide in price growth, driven by affordability and big variations in the cost of buying a home. House prices are rising fastest in the North West (2.9%) and Northern Ireland (6.7%), while prices are falling across southern regions of England and by up to 0.6% in London, where house prices and stamp duty costs are highest.
House price growth varies widely at a localised level, with the hottest markets for price inflation across Britain the Scottish Borders (TD postal area at 4.7%), followed by Oldham (OL, 4.4%), Kirkcaldy (KY, 4.2%) and Falkirk (FK, 4.2%).
At the other end of the spectrum, prices are posting small falls across southern England, particularly in coastal areas where the extra tax on second homes and a return to office working is impacting demand. House prices are 2.4% down in the Truro (TR) postal area, as well as Torquay (TQ, 1.9%) and Bournemouth (BH, 1.8%).
Improvements in mortgage availability mean first-time buyer numbers are on track to be 20% higher in 2025. First-time buyers will account for almost two in five home purchases (39% of sales) in 2025, and will be the largest group of home buyers, followed by existing homeowners using a mortgage (33%), cash buyers (21%) and landlords buying with a mortgage (7%).
While first-time buyers can borrow more, this doesn't mean they are buying higher-value homes. Zoopla data on what first-time buyers are looking to buy shows that they are looking to spend more in regional markets, by up to 5% compared to a year ago. However, in London, they are looking to buy homes that are 3% cheaper than a year ago, reflecting higher stamp duty costs, with prices flat across southern England.
Zoopla expects average UK house prices to increase by 1.5% over 2026, with a stronger-than-usual start to 2026 due to a release of pent-up demand as buyers return to the market, having delayed decisions in the run-up to the budget. This will support housing sales, which are expected to total 1.18 million in 2026.
House prices are expected to continue to rise at an above-average pace, over 2.5%, across the Midlands, northern England, Scotland and Northern Ireland in 2026. Lower house prices in northern England and Scotland mean better buyer affordability and a higher rate of house price inflation. Zoopla expects this north-south divide in price inflation to continue in 2026.
Average UK house prices are projected to be 1.5% higher in 2026, with an annual average increase of 2.1% a year between 2027 and 2029, as housing affordability continues to steadily reset and supports the number of sales.
"2025 has been a strong year for home moves, but the Budget hit activity in the final months of the year and saw many moving decisions put on hold," said Richard Donnell, executive director at Zoopla. "Now the uncertainty has lifted, we expect a stronger than usual start to 2026 as buyers return to the market."
"The appetite to move home remains strong, but affordability remains a constraint for those buying their first home or looking to trade up to a larger home, which will keep prices in check. There remain plenty of homes for sale, which will boost buyer choice as we start the new year."
"Average UK house prices are projected to be 1.5% higher over 2026, with a continued divide between southern England and the rest of the country, where affordability is better, and buying costs are lower. It is important that sellers remain realistic on pricing to secure sales in 2026, especially across southern England. Homeowners looking to move in the year ahead should understand the value of their home and what they can afford before starting their property search."
"First-time buyers drive every part of the property market," said Polly Ogden Duffy, managing director at John D Wood & Co. "When they kick-start activity at the entry level, it creates momentum throughout the entire system, allowing chains to form and transactions to progress across the country."
"With a continued shortage of rental homes pushing rents to record highs, buying is increasingly the more affordable option for many households - provided they can pass affordability checks and secure a mortgage. That's why the recent easing of affordability criteria is such a positive step. In many cases, buyers can comfortably manage monthly repayments but have historically struggled to access lending. Greater flexibility from lenders is beginning to change that, helping more people make the leap onto the property ladder. Supporting first-time buyers in this way is critical to maintaining healthy levels of market activity into 2026."
James Nightingall, founder of HomeFinder AI, said, "That being said, and although current mortgage rates may be favourable, some first-time buyers still struggle to save up a sufficient deposit to get on the property ladder," he said. "On a positive note, we are seeing an increasing number of developers who offer incentives or lower their asking price, which has allowed more first-time buyers to make the step towards homeownership this year."
