House prices and sales volumes are expected to grow in 2025 despite budget headwinds, according to the forecast edition of the latest House Price Index from Zoopla. 

The average house price is currently £267,200 having increased by 1.5% over the last 12 months (an increase of £3,900).The housing market returned to growth in 2024, with UK house prices recording average growth of +1.5% in the 12 months to October 2024, up from -1.2% a year ago. 

All regions and countries across the UK have recorded positive year-on-year growth, with the fastest price gains registered in Northern Ireland (6.3%) and the North West region (2.9%). 

House price growth remains below one per cent across southern England where affordability pressures are an ongoing drag on the scale of house price growth.

Sales agreed over the last four weeks are currently up 19% year-on-year, with buyer demand 25% higher over the same period. The sales market is on track for 1.1m sales completions over 2024 – 10% higher than in 2023. 

Sales completions over 2025 will be supported by a robust sales pipeline, 30% larger than this time last year, which is expected to deliver a strong start in the first few months of next year. 

Zoopla expects the number of sales to increase by five per cent over 2025 increasing to 1.15 million. Postponed home moves, an ageing population, rising running costs and changing working patterns will continue to impact moving decisions, in addition to the desire to seek a better home or location. 

First-time buyers will remain the largest buyer group, supporting housing chains and helping existing homeowners to move.

Richard Donnell, executive director at Zoopla, commented: “The housing market has been resilient in the face of higher borrowing costs over the last two years. Higher income growth and lower mortgage rates have helped reset housing affordability faster than many expected over 2024. This has supported an increase in the number of sales and house prices over the year, which we expect to continue over 2025.

“House price growth in southern England will continue to lag the UK average and incomes will need to rise faster than prices to help reset affordability and price more households into the market.

“First-time buyers will remain an important buyer group but existing homeowners looking to move will need more support to help realise their ambitions, with more and more having to look further afield to find better value for money.”