The UK housing market is bracing for a flurry of activity as buyers hurry to secure properties before tax breaks expire in April 2025 and stamp duty changes take effect.
According to property platform Zoopla, the anticipated changes have already triggered increased demand, with sales expected to accelerate over the next four months.
In the autumn budget, Chancellor Rachel Reeves announced a reduction in the zero-tax stamp duty threshold from £250,000 to £125,000 for all buyers.
First-time buyers will face an adjusted threshold of £300,000, down from £425,000, effective April 1, 2025.
These changes will hit first-time buyers in high-value areas the hardest.
Rightmove estimates that only 8% of homes in London will remain stamp-duty free for first-time buyers, compared to 24% in the southeast and 32% in eastern England.
US house prices and sales to climb
Zoopla reported that UK house prices increased by 1.5% in the year to October 2024, driven by a surge in demand following the budget announcement.
Prices are expected to rise by a further 2.5% in 2025, with home sales projected to reach 1.1 million next year—a 10% increase from 2023.
This growth stems from pent-up demand that built up over the summer, compounded by buyers rushing to benefit from existing tax breaks.
Richard Donnell, Zoopla’s executive director, highlighted that affordability has improved faster than expected due to rising incomes and stabilizing mortgage rates, paving the way for continued market momentum.
However, supply pressures have tempered price growth.
The market has seen an influx of properties, including former rental units and second homes, which has helped balance rising demand.
Estate agents currently hold an average of 34 unsold properties, up from 28 before the pandemic.
The Midlands, northern England, Scotland, and Wales are expected to outperform the UK average in house price growth next year, according to Zoopla.
Meanwhile, southern England faces slower growth due to heightened affordability challenges, particularly in London and surrounding areas.
First-time buyers in the spotlight
First-time buyers remain a vital segment of the market, but they face mounting challenges as affordability pressures grow.
Zoopla noted that demand among first-time buyers surged in the wake of the budget, with interest in London up 31% compared to last year.
Donnell stressed the need for support for existing homeowners looking to relocate. “Higher incomes and lower mortgage rates have reset housing affordability faster than anticipated,” he said.
“While this has driven sales and price growth, many existing homeowners are having to explore new areas for better value.”
The post UK home sales and prices set to soar ahead of April stamp duty changes appeared first on Invezz
