House Value Increase Slows Down, Predicted to Drop More as Housing Market Loses Pace
House price growth is slowing, according to Zoopla, as a surge in homes being listed for sale and a cooling demand from buyers collide. This shift comes after annual growth fell in the year to March 2025, with increases of just 1.6% compared to 1.9% in 2024.
Despite the slowdown, growth is still above the 0.2% rate recorded in March 2024. The average home price now stands at £268,000, marking an increase of £4,270 over the past year.
Zoopla attributes the slowdown to a combination of factors, including an increase in homes being put on the market, increasing economic uncertainty cooling buyer demand, and a seasonal slowdown following Easter. The increase in stamp duty on April 1 and US tariffs on economic growth have also added to this caution among home buyers.
Interestingly, while the number of homes for sale saw a 12% increase in the year up to March, buyer demand only increased by 1% compared to the same period last year. The average estate agent branch now holds 34 homes for sale, having previously held 31 homes in the same period last year and just 15 in 2022 during the pandemic boom.
However, Richard Donnell, executive director at Zoopla, remains optimistic. He predicts that house price growth will continue to slow further but still expects a 5% increase in sales volumes in 2025. Regions where affordability is better aligned to local incomes, particularly across the North and Midlands, are expected to lead this recovery.
Northern Ireland bucked the trend with a 6% increase in house prices in the year to March, while other strong performers included the North West with 3% growth and Scotland and the West Midlands with 2.7% and 2.6% respectively. On the other hand, homes in the South East of England experienced the weakest price growth, rising just 0.3% over the year.
In the North West, expert Martin Fishwick suggests the market remains active, driven by rising rents and more attractive mortgage rates. He notes that, while activity has slowed somewhat, there is still momentum for buyers.
Looking ahead, Zoopla expects the slowdown in house price growth to continue over the coming months, with the number of sales agreed increasing due to lower interest rates. The Bank of England is predicted to reduce the base rate at its next meeting on May 8, driving down mortgage rates. Changes in mortgage affordability tests may also boost sales by allowing borrowers to take larger loans.
Zoopla's Donnell concludes, "Revisions to how lenders are assessing mortgage affordability will unlock additional buying power and support sales volumes to help tackle the healthy stock of homes for sale."
- In the face of a slowdown in house price growth, Richard Donnell, executive director at Zoopla, still expects a 5% increase in sales volumes in 2025, with regions such as the North and Midlands leading the recovery.
- The increase in stamp duty on April 1 and US tariffs on economic growth have added to the caution among home buyers, contributing to the slowdown in house price growth.
- Despite the slowdown, the average home price now stands at £268,000, marking an increase of £4,270 over the past year.
- The number of homes for sale saw a 12% increase in the year up to March, while buyer demand only increased by 1% compared to the same period last year.
- Looking ahead, Zoopla expects the slowdown in house price growth to continue over the coming months, with the number of sales agreed increasing due to lower interest rates and changes in mortgage affordability tests.
