House Price & Sales in the UK 2025
The year 2025 has resulted in great anticipation among home buyers, precisely because of the consistency in which house prices in UK have plummeted over the last few years. Will there be a further dip in house prices similar to 2023 and 2022, or will the housing market pick up a surge? We bring to you more about this and the ground reality of house prices in UK in this article.
Land registry’s UK House Price Index, one of the most trustable sources when it comes to data on house prices in UK states that the average property price in the UK rose to 3.3% between the end of 2023 and 2024. In fact, the UK house prices rose to around 3.4% at the start of the year and ended with a high of 4.7% in 2024. The year before that, prices saw a dip of 2.5%. The fact that this data is purely based on actual house sales and not on demand estimation or any prediction makes it an authentic and valid source.
With higher mortgage rates, inflation, and past years dip in house prices, the anticipation was to see the continuity in fall of house prices. Contrary to the expectations, house prices in UK have in fact risen, and to significant levels. Estimations are that UK house prices will see a substantial increase and at faster rate to an extent beyond 5% in the coming years. For the current year (2025), the prediction is 3.5%, a 40% rise from previous years’ 2.5%, which again will see an organic rise continuing to the next year.
A survey conducted by the RICS UK in December shows an upward trend in house sales with increased enquiries reported from new home buyers. The knock-on effect resulted in house price inflation of 3.3% in November 2024. With this, the average house price UK went up to £290,000 from the previous year’s average of £285,000.
Coming Back to the Surge in Queries
But if one were to ponder upon why the sudden rush of enquiries, most of the traction if not all, arguably is because of the changes in Stamp Duty Land Tax (SDLT) laws.
What is the Stamp Duty Land Tax (SDLT)?
According to the latest amendment, any property or house bought before the 31st of March 2025 will not incur any stamp duty, which means an opportunity to save thousands of pounds. According to sources, until 31st March 2025 there will be no levy of stamp duty even for a house that would cost up to £425,000. But now, with the recent change in Stamp Duty Land Tax law, 5% stamp duty charges will apply for properties starting from £300,001 up to £500,000.
Below are some amendments you need to be aware of –
If you are a first-time home buyer –
Average House Prices in UK by Region
England £306,000
Scotland £195,000
Northern Ireland £191,000
Wales £219,450
Average House Prices in England by Region
London £511,300
Northeast England £168,800
Northwest England £226,630
Southeast England £377,900
Southwest England £317,615
Average House Prices in UK by Property Type
Semi-detached £283,550
Detached £437,000
Terraced £243,000
Flat £232,000
Which are the Best Prospects for Buying a House in the UK?
- 0% SDLT charges for houses up to £425,000 before 31st March 2025
- 0% SDLT charges for houses worth up to £300,000 after 31st March 2025
- 5% SDLT charges for houses that worth between £425,001 to £625,000 before 31st March 2025
- 5% SDLT charges for houses that worth between £300,001 to £500,000 after 31st March 2025
- 0% SDLT charges for houses worth up to £250,000 before 31st March 2025
- 0% SDLT charges for houses worth up to £125,000 after 31st March 2025
- 2% SDLT charges for houses worth £125,001 up to £250,000 after 31st March 2025
- 5% SDLT charges for houses worth £250,001 up to £925,000 before 31st March 2025
- 5% SDLT charges for houses worth £250,001 up to £925,000 after 31st March 2025
- 10% SDLT charges for houses worth £925,001 up to £1,500,000 before 31st March 2025
- 10% SDLT charges for houses worth £925,001 up to £1,500,000 after 31st March 2025
- 12% SDLT charges for houses worth above £1,500,000 before & after 31st March 2025
Let’s put it this way. From a home buyer’s perspective, it is obvious that lower the house price, better the prospects of buying a house. According to a survey from Zoopla, Northern England and Scotland currently are areas with the best prospects for buying a house and fertile for potential house price growth for 2025.
The prospects are based on factors such as affordability, potential for faster selling, and the flexibility to cut demand prices to attract home buyers. Data below illustrates the housing market potential –
How Will This Impact Mortgage Rates?
- Motherwell, Scotland tops with a house price at £129,055. A house price growth of 3.8% per annum and the lowest time sell a house being 13 days
- Paisley & Glasgow second top with an average house price at £134,500 & £157,800 respectively. A house price growth of 1.3% & 3% respectively, and a time to sell a house at an average of 15 days
- In England, Sunderland topped with an average house price at £119,200 with a house price growth of 2.4% per annum and the average time to sell a house being 30 days
- Durham & Newcastle follow with an average house price at £140,500 & £160,800 respectively with a house price growth at 3.8% & 2%, and with time to sell a house clocking at an average of 30 days
Interest rates on mortgages dipped though not drastically from 5.94% to 5.48% by the mid-end of 2024. With a two-year fixed rate, the market was not affected much, but with the five-year fixed rate which saw the fall from 5.56% to 5.25% coming to place the market seemed altered and challenged, and this remained the case until the end of year. Fearing a possible inflation, the Bank of England held its based rate fixed at 4.75% in December.
This year, i.e. in 2025, the good news for home buyers is of a strong possibility on cuts on interest rates to an extent of up to 4 times to encourage and boost economic activity. This is strongly backed by market assessments and predictions from at least 51 economists which should mean that there is a high chance that this turns out to be true. If it does, this will bring about a huge transformation especially where house prices are expensive; London will likely experience a good growth particularly in the southwest, east, and southeast.
What is in for Renters?
Rents in 2025 are set for an increase, but not substantially. The rise will see a slower pace and factors such as mortgage rates, government support, economic policies will all add up to this. With SDLT coming into the picture pushing for increased enquiries, landlords will likely take advantage of this to sell up. According to a report, there were 11 enquires for one potential rental property, a huge increase compared to 6 enquiries recorded a couple of years ago.
Rents in 2025 are set for an increase, but not substantially. The rise will see a slower pace and factors such as mortgage rates, government support, economic policies will all add up to this. With SDLT coming into the picture pushing for increased enquiries, landlords will likely take advantage of this to sell up. According to a report, there were 11 enquires for one potential rental property, a huge increase compared to 6 enquiries recorded a couple of years ago.
Currently the figure is 2.5% increase in rental costs across the UK, which is not too bad for tenants. 2025 may see an increment in rental costs across the UK, but London may still remain on the lower side.
Conclusion:
Perhaps cloud will be settled with a clearer picture when we progress into the mid of the year. Tenancy will also be a major factor in driving economic growth as 40% of income is consumed by paying the rent alone. Government policies should be enacted such that both tenants and homeowners should benefit. As we move forward, economic shifts and political changeovers including inflation and demographic shifts will likely have an impact on house prices in UK.
At Extension Architecure, we bring to you the latest with housing and its impact on homeowners, renters, realtors, and for the people in general. Keep a tab on our space to hear all about industry happenings, paradigm shifts in construction & architecture and how they are affecting you and your endeavours.
