Zoopla predicts 1.5% growth in UK house prices next year
The UK housing market is on course for its busiest year for home moves in three years, with projected transactions in 2025 set to reach around 1.2 million – about 9% higher than in 2024 and broadly in line with the 10-year average.
The latest figures, drawn from Zoopla’s House Price Index, point to a busier purchase market even as house price growth remains modest.
Stability in mortgage rates, better mortgage availability and rising household incomes have helped support buyer demand and push up sales volumes. The data suggest increased transaction activity rather than significant price inflation.
Average house price growth slows
The higher level of market activity is not translating into faster house price growth. Average UK property values now stand at £270,300, which is 1.1% higher than in November 2024. That compares with a 1.9% annual rise over 2024 and remains well below the 10-year average of 3.8% a year.
The figures also underline a pronounced regional split. Prices are rising fastest in the North West, up 2.9% year on year, and in Northern Ireland, up 6.7%. In contrast, values are edging lower across southern England, including London, where prices are down by up to 0.6%. According to Zoopla, affordability pressures and higher stamp duty costs in the capital and surrounding regions are weighing on prices.
Localised markets show sharp contrasts
At local level, some markets are seeing stronger growth than the national picture. The Scottish Borders (TD postcode area) has recorded annual price growth of 4.7%, followed by Oldham (OL, 4.4%), Kirkcaldy (KY, 4.2%) and Falkirk (FK, 4.2%).
By contrast, several coastal markets in the South are posting small annual declines. Prices are down by 2.4% in the Truro (TR) area, 1.9% in Torquay (TQ) and 1.8% in Bournemouth (BH). Zoopla links this to the impact of higher tax on second homes and a shift back towards office-based working, which has eased some of the pandemic-driven demand in these locations.
First-time buyers underpin sales
First-time buyers are expected to be the largest buyer group in 2025. Zoopla forecasts that first-time buyer activity will be around 20% higher than in 2024, with this segment accounting for about 39% of all purchases. Existing mortgaged homeowners are projected to make up 33% of transactions, cash buyers 21%, and mortgaged landlords 7%.
While lending conditions have improved for some, the report indicates that first-time buyers are not uniformly purchasing more expensive homes. Across many regional markets, first-time buyer budgets are roughly 5% higher than a year ago. In London, however, they are targeting homes around 3% cheaper than in 2024, reflecting stretched affordability and higher stamp duty charges against a backdrop of largely flat pricing across southern England.
Outlook for 2026 and beyond
Looking ahead, Zoopla expects average UK house prices to rise by 1.5% in 2026, with a relatively strong start to the year as buyers who delayed decisions ahead of the Budget return to the market. Overall housing transactions are forecast to total about 1.18 million next year.
House price growth of more than 2.5% in 2026 is anticipated across the Midlands, northern England, Scotland and Northern Ireland, supported by lower entry prices and better affordability than in southern England. Zoopla expects this north-south divide in price performance to persist through 2026.
Beyond that, the portal projects that average UK house prices will increase by around 2.1% a year between 2027 and 2029, as affordability gradually improves and sustains a steady level of housing sales.
Commenting on the findings, Richard Donnell (pictured right), executive director at Zoopla, said: “2025 has been a strong year for home moves but the Budget hit activity in the final months of the year and saw many moving decisions put on hold.
“Now the uncertainty has lifted, we expect a stronger than usual start to 2026 as buyers return to the market. The appetite to move home remains strong but affordability remains a constraint for those buying their first home or looking to trade-up to a larger home which will keep prices in check.”
Donnell added that there remains plenty of homes for sale, which will boost buyer choice as the new year approaches.
“Average UK house prices are projected to be 1.5% higher over 2026 with a continued divide between southern England and the rest of the country where affordability is better and buying costs are lower,” he said.
“It is important that sellers remain realistic on pricing to secure sales in 2026, especially across southern England. Homeowners looking to move in the year ahead should understand the value of their home and what they can afford before starting their property search.”
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