0:01 AM, 28th February 2025, About 2 months ago 1
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The housing market has kicked off 2025 strongly with prices rising but there’s a clear divide between buyers increasingly opting for houses rather than flats, one index reveals.
According to Zoopla, the divide between house and flat values has hit its widest in three decades.
The average house is now £319,500 – which is 67% more than the typical flat at £191,300.
The index also highlights robust growth across all major market indicators.
The platform’s Richard Donnell said: “The housing market remains resilient with more people looking to move home in 2025 and 2026 than this time last year.
“Average earnings rising by 6% over the last year, well ahead of inflation, is boosting buyer confidence and helping to reset housing affordability.
“Flats have become even cheaper compared to houses over the last five years.”
He added: “Buyers are still prioritising houses over flats but there are opportunities for canny buyers prepared to do their homework and weigh up the purchase of a flat rather than potentially waiting longer to buy a house.”
Mr Donnell says house prices will be ‘kept in check’ by 2-2.5% this year and buyers will have strong negotiating power as more homes to market.
Zoopla says that new sales agreements have climbed 10% compared to last year, while the total number of homes listed for sale has risen by 11%.
This surge in activity matches broader economic improvements, including stronger wage increases, brisk retail spending and brighter consumer sentiment.
Despite this momentum, annual house price growth has softened to 1.9% in the year to January 2025, down slightly from 2% in December 2024.
The platform points to rising mortgage rates — up 0.5% since September 2024 — and looming stamp duty hikes from April as factors restricting gains.
For many buyers, these costs will add £2,500 to purchases and prompt them to adjust their offers and share those costs with the seller.
The index reveals that Northern Ireland boasts a 7.2% rise in average prices, while the North-West enjoys a 3% uptick.
In contrast, London and southern England have seen more modest increases of 1% to 1.2%.
January’s slowdown reflects a dip in confidence following the Autumn Budget last year, which has squeezed affordability.
Supply trends further explain the house-flat divide as the number of flats available has jumped 14% in early 2025 – outpacing a 5% rise in houses on offer.
Demand in buying a house has risen 16% year-on-year, dwarfing a 1% uptick for flats.
This mismatch has kept flat price growth at a sluggish 0.5%, while house values have risen by 2.2%.
First-time buyers, particularly outside London, are driving the trend towards houses and more than half (52%) now want three-bedroom properties, up from 44% in 2017.
Interest in one- or two-bedroom flats has slumped from 25% to 17%.
Concerns over flat running costs, such as service charges and ground rents, along with fire safety worries in newer builds, have dampened enthusiasm, despite flats offering better affordability.
Tom Bill, the head of UK residential research at Knight Frank said: “Demand is playing catch-up with supply in the UK housing market, which is keeping downwards pressure on prices.
“Sellers are motivated by the looming stamp duty deadline, a desire to act after the political upheaval of last year and growing financial pressures due to higher mortgage rates.
“Buyers have started the year in more circumspect mood as mortgage rates remain above their pre-Budget level and the economic outlook remains weak.
“The higher proportion of flats coming to the market in part reflects the fact the stamp duty hike from April will have a greater impact on lower-value markets.”
Nathan Emerson, the chief executive of Propertymark, said: “With Stamp Duty changes across England and Northern Ireland due to take effect from April, we have seen an increased keenness from many people to complete as soon as possible, to typically save themselves around £2,500 pounds when purchasing an average priced property.
“The magnitude of house price growth does typically vary across different areas of the UK; however, with inflation now standing higher at 3%, we may see this influence base rate decisions over the coming months to help maintain overall stability within the economy.
“With an ever-growing population, all devolved governments must not only turn their attention to ensuring house building targets are delivered in the areas where there is a need but also ensure that the right type of homes are being built in line with the shift in buyer behaviour.”
Andy
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Sign Up11:23 AM, 28th February 2025, About 2 months ago
It always amazes me that those paid to supposedly be "expert" on the market and economy are all too ready to swallow the narrative the Government gives them. Donnell from Zoopla says wages up 6% "well ahead of inflation" so buyers are confident... the Government rigs the CPI !! Anyone who buys their groceries, clothes, pays their energy bills will tell you 6% ain't well ahead of inflation.
Flat prices are suppressed in part because landlords aren't in the market buying them, especially in London. Elsewhere in the UK the demographic of first-time buyers has shifted; they're older, already married or soon-to-be, and a 3-bed semi suits their plans better than a 1 bed flat.