0:01 AM, 29th April 2025, About 3 weeks ago
Text Size
The property market is experiencing a cooling in house price rises, with annual growth dropping to 1.6% in March from 1.9% at the close of 2024, research reveals.
According to Zoopla’s latest house price index, the market remains resilient, despite the slowdown.
There was a 6% rise in agreed sales compared to last year, driven by a surge in available homes and evolving mortgage affordability criteria.
The average UK home now costs £268,000, up £4,270 over the past year.
However, buyer enthusiasm has waned, with demand only 1% higher than a year ago, a sharp decline from the 10% surge earlier in 2025.
Richard Donnell, executive director at Zoopla, said: “The housing market continues to see sellers listing their home for sale which is supporting continued growth in the number of sales.
“This reflects a group of determined movers who remain active despite a backdrop of economic uncertainty and shifting sentiment.”
He added: “While house price growth is expected to slow further, towards 1 to 1.5%, we’re still on course for a 5% uplift in sales volumes in 2025, assuming sellers remain pragmatic on pricing.
“Regions where affordability is better aligned to local incomes, particularly across the North and Midlands, are set to lead this recovery.”
The decline in buyer enthusiasm, Zoopla says, includes factors such as the expiry of stamp duty reliefs and a quieter Easter period.
Also, some buyers have concerns over US tariffs impacting economic growth have tempered their confidence.
Meanwhile, the supply of homes for sale has climbed 12% compared to last year.
Estate agents are managing an average of 34 listings per branch, a significant jump from the pandemic-era low of 15 in 2022 and up from 31 a year ago.
Many of these sellers are also purchasing properties, contributing to the uptick in sales agreements.
A key development supporting market activity is the adjustment in how lenders evaluate mortgage affordability.
Some institutions are easing stress tests, previously set at 8-9% interest rates, to around 6.5%, a level seen before 2022.
This shift could enhance borrowing capacity by 15% or more.
For example, a first-time buyer with monthly repayments of £1,020 at a 4.5% mortgage rate, currently stress-tested at £1,550 (8.5%), would only need to prove affordability at £1,275 under the new 6.5% rate.
This change is expected to bolster demand and help clear the increased stock of properties.
While the national trend shows slowing price rises, some regions are defying the slowdown.
Areas like the West Midlands, Northern England, Wales and Scotland are seeing price increases of 2.2-3%, with Northern Ireland recording a robust 6% growth.
These regions benefit from stronger demand and more accessible pricing, making homeownership achievable for more households.
Sales agreements have surged by 14% in Wales and 10% in both the North West and North East.
In contrast, southern England, where property prices are less affordable relative to incomes, is experiencing growth below 1%.
Toby Leek, the president of NAEA Propertymark, said: “Improved two-year mortgage products, greater borrowing power and sustained confidence are all playing key roles in helping raise the number of homes for sale and boost overall momentum within the housing market.
“Alongside the fact that the spring and summer months are proven to be historically busier times of the year, many of those who are waiting in the wings due to riding out current global economic uncertainty and the continued journey in interest rates cooling may be finding it difficult to resist the broad range of properties available coupled with their improved financial status.”
