Stamp duty could push house prices up in 2025 - which areas are worst affected?
The average price of a property in the UK was £267,200, as of October 2024
GETTY
UK house prices are projected to rise by 2.5 per cent in 2025, with sales volumes expected to reach 1.15 million.
Increases will be steeper across the Midlands, Northern England, Scotland and Wales. Part of the reason for the increase is stamp duty changes, as from April next year, many homebuyers will face higher stamp duty costs, particularly in England and Northern Ireland.
The proportion of existing homeowners paying stamp duty will jump from 50 per cent to 83 per cent, with most paying an additional £2,500. First-time buyers will also feel the impact, with the number required to pay stamp duty doubling to 40 per cent.
Mortgage rates are likely to remain stable at around 4.25 per cent for a 75 per cent loan-to-value five-year fixed-rate loan.
Property prices are projected to increase by 2.5 per cent in 2025
PAThe UK housing market did bounce back to growth in 2024, with the latest figures showing prices have risen by 1.5 per cent compared to last year, marking a significant turnaround from the 1.2 per cent decline seen 12 months ago.
The recovery has been supported by rising household incomes and more favourable mortgage rates, which have dropped to around 4.1 per cent.
The area noticing the steepest growth in house prices is Northern Ireland, up by 6.3 per cent with Belfast at exactly this figure.
This growth is more than double in comparison to any other city in the UK, with Manchester the closest to Belfast at 3.1 per cent.
The south did not notice as great of an increase in comparison to the north with some areas even experiencing modest price falls such as Ipswich down by 1.1 per cent and Truro down by 1.2 per cent.
The disparity reflects greater affordability challenges in the south, where higher incomes are needed to enter the market.
Terraced houses have shown the strongest annual growth at 2.1 per cent, with prices rising by £4,810 over the past year. Semi-detached properties have gone up too, recording a 1.6 per cent increase and a £4,280 rise in value.
Average price for each house type
- Detached houses, £449,500
- Semi-detached houses, £273,900
- Terraced houses, £236,700
- Flats, £192,100
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Stamp duty will rise next year
GETTYExecutive director of the research and insight team at Zoopla Richard Donnell said: "We expect house prices and sales volumes to edge higher in 2025, despite budget changes and uncertainty about whether mortgage rates will continue to fall.
"The housing market has been very resilient in the face of higher borrowing costs over the last two years.
"We expect house price growth in southern England to under-perform the UK average over 2025 and into 2026."
Over the longer term, house prices are forecast to grow by 7.5 per cent in total by the end of 2027.
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