Zoopla House Price Index: February 2025

Adapted from a Zoopla article by Richard Donnell, Executive Director – Research

The housing market is resilient, supported by faster growth in average earnings. There are the most homes for sale in 7 years, which will keep price inflation in check. But are buyers missing opportunities in the flats market?

Key takeaways

Sales agreed are up 10% year-on-year, as 11% more homes come to market

• House price inflation ticks lower to 1.9% in response to higher mortgage rates and rising buying costs from April
• There's a rapid growth in the number of flats for sale: with 14% more flats coming to market versus 5% more houses
• The value of houses has increased 24% over the last 5 years, that's 3 times faster than the value of flats, which have seen 7% growth
• The price gap between houses and flats is now at a 30-year high (with houses worth nearly twice the price of flats)
• Buyers are still prioritising houses, despite the lower prices of flats
• Mortgage repayments for a flat are currently 43% lower than rental costs
• Strong earnings growth is supporting activity, but a greater supply of homes for sale is expected to keep price inflation in check

Key figures

The average house price in the UK is £267,200 as of January 2025 (published in February 2025).

Property prices are now at +1.9% inflation compared to a year ago and the average UK house price is set to rise by 2.5% by the end of the year.

Sales activity higher but rate of house price inflation dips

The sales market continues to register positive momentum, with all key measures of market activity running 10-11% higher than a year ago. The number of sales agreed is 10% higher, and the number of homes for sale is up 11% compared to a year ago, meaning there are now more buyers in the market.

Increased levels of housing market activity mirrors other measures of economic activity, including robust earnings growth, higher retail sales and signs that consumer confidence is on the rise.

But while market activity continues to increase, the annual rate of house price inflation is edging lower. It increased +1.9% in the 12 months to January 2025, down from +2.0% in December 2024.

House price inflation slowed across most regions of the UK in January. This reflects the sharp dip in consumer confidence in the wake of the Autumn 2024 Budget, and mortgage rates rising by 0.5% since September 2024.

Stamp duty impact starts to feed through

The moderation in house price inflation may also reflect buyers starting to factor in higher stamp duty rates.

From April 2025, half of homeowners will have to pay an extra £2,500 per purchase, while another third will pay up to this level. 40% of first-time buyers will also pay more stamp duty, up from 20% today.

Home buyers will expect to reflect this extra cost in their offers, typically looking to split the cost with the seller. In monetary terms the differences are not large, but the overall impact of these stamp duty changes will keep house price inflation in check over 2025.

Surge in number of flats listed for sale

One notable trend emerging during the early weeks of 2025 is a double-digit increase (14%) in the number of flats on the market, compared to a more modest increase (5%) in the number of houses for sale.

A return to price increases for flats in 2024 has brought more supply to the market, with flats accounting for 1 in 4 homes currently for sale.

Two in every 5 flats for sale (40%) have an asking price of less than £20,000 above the last purchase price, compared to just 6% of houses.

Gains, even small, are not guaranteed though, with 15% of flats priced lower than they were previously purchased for.

Housing market outlook for 2025

The housing market remains resilient with more people looking to move home in 2025 and 2026 than this time last year. Average earnings growth of 6% over the last year, well ahead of inflation, is supporting buyer confidence and helping to reset affordability.

There has been a sizable increase in the number of homes for sale in the early weeks of the year, which is giving buyers greater choice and stronger negotiating power.

Alongside higher stamp duty costs coming in for many from April, we expect house price inflation to be kept in check at 2-2.5%, with above-average growth in more affordable markets outside southern England.

To read the full Zoopla report please visit

www.zoopla.co.uk/discover/property-news/house-price-index/

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