UK house price growth slows to 1.8 per cent as spring surge in homes for sale reinforces buyers market
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Homes for sale are up 11 per cent year-on-year, with further increases expected as nearly 30 per cent of listings typically launch between March and May
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Sales agreed have risen five per cent year-on-year, with buyer demand still rising, up 10 per cent, despite static mortgage rates and higher stamp duty from April
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Price growth is above average in the North West and Scotland, while values stagnate or fall across southern England and London, widening the North-South divide.
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Second-home hotspots are feeling the pinch with prices falling in coastal towns like Truro and Torquay as double council tax rules push more listings to market
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Stamp duty ‘hangover’ has hit London with buyer demand down three per cent and eight in 10 first-time buyers now facing higher tax bills from April
UNDER EMBARGO UNTIL 00.01 WEDNESDAY 26TH MARCH, 2024, London: House price growth is slowing after a sustained recovery over the last 12 months, reveals property website Zoopla in its latest House Price Index. The annual rate of UK house price growth dipped to 1.8 per cent in February, down from 1.9 per cent in January and is set to slow further in the coming months. The average price of a UK home is currently £267,500, £4,750 higher than a year ago.
House price growth is slowing as the growth in the number of homes for sale outpaces the increase in the number of sales being agreed. There are 11 per cent more homes for sale compared to this time last year, while sales agreed are five per cent higher, strengthening the buyers’ market. The average estate agent has 33 homes for sale compared to 29 last year.
The number of homes for sale is set to rise even further as the market enters the spring selling period, further boosting choice for home buyers. The months of March, April and May account for almost 30 per cent of homes listed for sale each year.
Static mortgage rates, averaging 4.4 per cent for a five year fixed rate, compared to four per cent in late 2024 have also reduced buying power in recent months, while a return to higher rates of stamp duty from April means higher buying costs. 80 percent of home owner buyers and 40 per cent of first-time buyers will pay more stamp duty land tax to move home from April which they will want to reflect in the price they pay.
Table 1: Annual UK house price inflation slowing
North-South housing divide in supply and demand widens
The closely watched Zoopla report reveals different trends in supply and demand between southern England and the rest of the country. Buyer demand in southern England is higher than a year ago, however is failing to keep pace with the increase in homes for sale. This explains why house price growth is low across southern England, running at +1 per cent or lower across London, the South East, South West and Eastern regions. At a local level, house prices are falling in the Dartford (-0.8 per cent), Ipswich (-0.2 per cent) and NW London (-0.1 per cent) postal areas.
Table 2: Supply-demand imbalance between southern England and rest of UK
From 1st April, an estimated 150 councils across the UK are set to double council tax on second homes, further boosting supply in areas with a greater share of second homes, such as the South West of England. At a localised level, prices are falling in Truro (-0.8 per cent) and Torquay (-0.7 per cent) in the South West, both second-home hotspots.
Lower house prices in regions outside southern England mean better affordability for home buyers and greater potential for house prices to increase at a faster rate. In northern England, the Midlands and Scotland, buyer demand is 10 per cent higher than a year ago, while the supply of homes for sale has grown more slowly. This is supporting above-average house price growth which is running three per cent higher in the North West and 2.5 per cent higher in Scotland over the last year.
At a localised level, house prices are rising fastest in Motherwell (4.3 per cent) and Kirkcaldy (3.8 per cent) postal areas in Scotland. In Northern England prices are rising over twice as fast as the national average in Wigan (3.8 per cent), Blackburn (3.7 per cent), Lancaster (3.6 per cent) and Bradford (3.6 per cent) postal areas. In all of these areas average house prices are between £130,000 and £220,000 versus a national average of £267,500.
Stamp duty hangover hits London hardest
London is the only area of the country where buyer demand is lower (-3 per cent) than a year ago. Many first-time buyers brought forward decisions to buy homes late last year to avoid paying higher stamp duty from 1 April 2025, creating a lull in first-time buyer demand as the stamp duty deadline approaches.
Table 3: First-time buyer demand impacted by higher stamp duty costs from April
Eight in 10 first-time buyers in London will pay stamp duty from April 2025, compared to less than half under the current thresholds. First-time buyer demand2 is down across all price bands in London and this has contributed to the decline in buyer demand across the capital.
First-time buyer demand is higher across the rest of England where the majority of first-time buyers (six in 10) will continue to pay no stamp duty on purchases below £300,000 from April. First-time buyer demand is noticeably higher than a year ago in the South East and the Midlands as first-time buyer demand is displaced from London into markets with better value for money.
Richard Donnell, Executive Director at Zoopla, provides an outlook on the market: “We expect the growth in sales agreed to continue rising at a steady pace over 2025 as more sellers, most of whom are also buyers, enter the market in the coming months. House price growth is set to moderate further as supply grows and the extra costs of stamp duty in England feed through into house prices.
“A slowing in house price growth is not a major concern although the market needs some growth in prices to encourage sellers to come to market and buyers to make realistic offers on homes for sale.
“There is plenty of demand for homes but also lots of choice. Households looking to sell their home in 2025 need to be careful when setting their asking prices if they are to attract sufficient demand to agree a sale. It’s important to seek the advice of local estate agents to inform the most suitable pricing strategy for every home.”
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