"Prices are on track to be one per cent higher over 2025, half the level forecast"
- Richard Donnell - Zoopla
Housing market activity has increased year-on-year, defying the usual summer slowdown, with buyer demand up 11% and agreed sales up 8%, according to Zoopla’s latest House Price Index. This growth has come alongside a notable increase in listings, with an average of 37 properties now available per estate agent branch. Many buyers are aiming to complete deals before the start of the school holidays and the traditional August lull.
Changes in mortgage lending criteria have played a key role in driving this uptick in activity. Buyers using mortgages are now able to borrow up to 20% more than they could three months ago, without an increase in rates. This has widened access to the market and helped raise buyer demand and agreed sales across all regions and nations of the UK.
However, rising stamp duty costs are placing downward pressure on house price growth. Following the end of temporary stamp duty reliefs in April, 83% of homeowners are now liable for the tax, compared to 49% prior to the changes. On average, the added cost amounts to around £2,500 per transaction, approximately 1% of the UK’s average house price. Many buyers are attempting to offset these costs through lower offers, which is beginning to influence agreed sale prices.
Stamp duty changes have also widened the burden for first-time buyers. While these buyers typically benefit from reduced rates and tend to purchase lower-value homes, 41% are now paying stamp duty, up from 19% earlier this year. The impact is most significant in higher-value markets such as London and the South East, where stamp duty on the average first-time buyer home in London now reaches £6,100, compared with zero before April.
Nationally, house price inflation has slowed to 1.3%, with the average UK home now valued at £268,400. This marks a modest £3,350 increase over the past 12 months. The deceleration reflects both the increase in stamp duty costs and a 12% rise in the number of homes for sale, which has reinforced buyer leverage and helped keep price increases subdued.
Although current growth is up from 0.4% recorded in June last year, it has fallen sharply from the 2.1% rate seen in December 2024. Regional differences remain pronounced. Northern Ireland has experienced the strongest annual growth at 6.1%, including a 7.8% rise in Belfast. Elsewhere in Northern England, Wales and Scotland, prices are rising between 2% and 3%. By contrast, southern England is showing the slowest growth, with annual rates of 0.2% in London and the South East and 0.3% in the South West.
Some locations are now seeing annual declines. Truro, Torquay and Exeter have recorded price falls of -1.3%, -1.2% and -1.1% respectively, ranking among the largest outside London.
“The housing market is broadly in balance,” said Richard Donnell, executive director at Zoopla. “We're seeing healthy levels of demand and sales, but this isn't sparking faster price inflation. In fact, more homes for sale, particularly across southern England, are reinforcing a buyer's market, keeping price rises in check. Many more home buyers are paying stamp duty since April and want this extra cost reflected in the price they pay. While mortgage rates are holding steady, less stringent affordability testing has boosted buying power and is supporting more sales despite increased uncertainty.”
“At the start of the year, we predicted house prices would rise just two per cent, at the lower end of forecasts for house price inflation,” Donnell continued. “Prices are on track to be one per cent higher over 2025, half the level forecast. A greater supply of homes for sale and mortgage rates remaining higher than expected are the key reasons for weaker growth. Low house price inflation is not a bad thing so long as there is enough market confidence for people to list their homes and make bids to buy homes.”
David Powell, chief executive at Andrews Property Group, added, “The market is continuing to find its new normal since the stamp duty incentive was withdrawn at the end of March 2025. In addition, businesses are coming to terms with the increases in National Living Wage and National Insurance. The market continues to show incredible resilience; however, the slowdown in house prices is starting to impact consumer confidence, illustrated by the increased number of properties currently on the market for sale.”
“Without a reduction in interest rates or Government intervention, it's difficult to see any material change for H2,” Powell continued. “The obvious and immediate route is to create a more palatable and permanent solution to stamp duty to help ignite the market."
"The Government will certainly need a more flamboyant market to provide confidence to developers to build towards the targeted 1.5 million homes. The affordability challenge to buyers remains, and I would advocate for immediate remedies to help consumers buy with confidence.”
Looking ahead, Zoopla expects that sales volumes in 2025 will exceed last year’s by 5%. However, it has revised its house price growth forecast downward from 2% to just 1%, citing ongoing affordability challenges, higher-than-anticipated mortgage rates, and the growing weight of stamp duty on buyers’ budgets.
Tom Bill, head of UK residential research at Knight Frank comments, “The UK housing market is following a similar pattern to the UK economy this year. Activity was pulled forward into the first quarter and, after a subsequent lull, the recovery has not been as strong as hoped."
"The market hasn’t faced a general election in 2025, but the uncertainty of another autumn Budget means some consumers appear to be already adopting the brace position. High levels of supply, in part caused by April’s stamp duty cliff edge, will also keep downward pressure on prices in the short term. Markets are pricing in two further rate cuts this year, but if inflation comes under control more quickly than expected, that would boost demand by trimming mortgage rates further below 4%.”
Matt Thompson, head of sales at estate agency Chestertons, says, “Compared to the summer of last year, we have seen a more active property market which has been driven by an influx of vendors putting their homes up for sale,"
"This has given some house hunters a larger selection of properties to choose from, which has inevitably led to more contracts being exchanged. Some buyers, however, are still pausing their search in the hope that the Bank of England will announce another rate cut in August.”
