0:01 AM, 29th November 2024, About 4 days ago
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House prices are set to rise next year as buyers rush to beat stamp duty changes.
According to Zoopla’s House Price Index, house prices will rise by 2.5% in 2025, and by 7.5% over the next three years.
Currently, about half of owner-movers pay stamp duty, but according to Zoopla, this will increase to 83% from April, with most paying an extra £2,500 per sale.
The stamp duty threshold is currently £250,000 (£425,000 for first-time buyers), but from April next year, it will revert to £125,000 for standard residential purchases and £300,000 for first-time buyers.
For landlords, the stamp duty surcharge on additional homes was increased in the Budget from 3% to 5%.
According to Zoopla, the housing market bounced back with UK house prices recording an average growth of +1.5% in the 12 months to October 2024, up from -1.2% a year ago.
The average house price is currently £267,200 having increased by 1.5% over the last 12 months (an increase of £3,900).
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 1% across southern England where affordability pressures are an ongoing drag on the scale of house price growth.
The property portal highlights higher-than-expected income growth improving housing affordability.
Data from the Office for Budget Responsibility (OBR) shows household disposable incomes rising by 15% between Q2 2022 and Q2 2024, while house prices increased by just 1.5% over the same period.
This trend has improved affordability without a drop in house prices.
Richard Donnell, executive director at Zoopla said: “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.”
Zoopla reveals 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.
According to the property portal, 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 5% over 2025 increasing to 1.15 million.
The property portal reveals more buyers are entering the market ahead of next year’s stamp duty changes. According to the House Price Index, the proportion of first-time buyers having to pay stamp duty from next April will double to 40%.
Matt Thompson, head of sales at estate agency Chestertons said: “As we are approaching the end of the year, we are already seeing more buyers entering the market which is not typical for this time of year and a strong indication that 2025’s property market will be buoyant.
“One reason for the uplift in buyer activity are changes to stamp duty, announced in the Autumn Budget. These will come into effect in April 2025, driving first-time buyers in particular to get on the property ladder before that deadline and will fuel a busy start to next year’s property market.”
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