The UK housing market is expected to continue its recovery in 2025, with house prices forecast to rise by 2.5% and sales volumes projected to grow by 5% to reach 1.15 million, according to Zoopla’s latest market outlook.
This optimistic forecast follows a stronger-than-anticipated performance in 2024, as the market shrugged off political and economic uncertainty, including the impact of Labour’s first Budget.
By October 2024, UK house prices had risen by 1.5% year-on-year, marking a return to positive growth. Northern Ireland led the charge with a robust 6.3% increase, followed by the North West at 2.9%. In contrast, many parts of southern England saw prices grow by less than 1%, reflecting ongoing affordability constraints.
Zoopla attributes the market’s resilience to rising household incomes, which grew by 15% between Q2 2022 and Q2 2024. This rise helped offset the effect of higher mortgage rates and eased affordability pressures without triggering widespread price corrections.
2025: steady growth driven by improved affordability
Looking ahead, Zoopla predicts a continuation of this upward trend, with house prices expected to grow modestly at 2.5% in 2025. This assumes mortgage rates stabilise at around 4.25%.
However, regional disparities are expected to widen. More affordable areas in the North and parts of Northern Ireland are forecast to see the fastest growth:
• Belfast: +6.5%
• Wigan: +3.9%
• Oldham: +3.7%
Meanwhile, some southern towns are projected to see slight declines:
• Truro: –1.2%
• Ipswich: –1.1%
• Dartford: –1.2%
The persistent north-south divide underscores affordability as the dominant force shaping housing demand.
Sales activity set to pick up pace
Transaction volumes are expected to rise by 5% in 2025, reaching 1.15 million completions. Several factors are fuelling this uptick:
• A 30% larger sales pipeline compared to the previous year
• Continued strength in first-time buyer demand, helping to drive chain activity
• Improved affordability from rising wages and easing mortgage rates
First-time buyers remain the most active segment, playing a pivotal role in maintaining momentum across the chain.
Shifting buyer priorities
Zoopla highlights three key trends that are likely to influence the market next year:
• Affordability reset: Rather than waiting for price drops, many buyers have adapted to higher borrowing costs thanks to income growth.
• First-time buyers lead the way: With fewer homeowners moving, first-time buyers have become the backbone of the market.
• Value-driven migration: Homebuyers are increasingly searching outside traditional hotspots in favour of more affordable areas in the North and devolved nations.
Commenting on the report, Richard Donnell, Executive Director at Zoopla, said: “The housing market has shown surprising resilience in 2024. Rising incomes and lower mortgage rates have stabilised affordability, supporting house price growth and increasing sales.
“While affordability in southern England remains stretched, we expect house price inflation to continue leading in northern markets and other affordable areas. Existing homeowners will need more support, particularly as more buyers look further afield for better value.”
The message for 2025 is clear: while regional differences will remain, the UK housing market is poised for measured growth, underpinned by a combination of improving affordability, first-time buyer activity, and a rebalancing of demand towards value-led locations.
