The UK housing market has shown resilience in 2025, with House Price steadily increasing. And amidst this data, we can note a distinct trend – buyers are increasingly favouring houses over flats.
The gap between house and flat prices has reached its widest point in 30 years, with the average house now costing 67% more than the typical flat. This shift in buyer preferences, coupled with rising salaries and an increased volume of homes for sale, has propelled the market forward.
House-Flat Price Gap
According to Zoopla, the divide between flat and house prices has reached its widest point in three decades. The average house now costs £319,500—67% more than the typical flat, which stands at £191,300.
The market remains strong across all major indicators, with demand fuelling transactions. The volume of new sales agreements is 10% higher than last year, and the inventory of homes for sale is 11% higher.
Buyer Confidence & Housing Affordability
Zoopla noted that more people are contemplating a move in 2025 and 2026 than at this point last year. He attributed this to the increase in salaries, which has risen 6% in the past year.
But, while houses remain the first choice for buyers, apartments present opportunities for those willing to look around.
House Prices Rising but Growth Slows
Despite more market activity, annual house price growth has slowed slightly, at 1.9% in January 2025 compared to 2% in December 2024.
Higher mortgage rates — 0.5% more since September 2024 — and the upcoming stamp duty changes in April are key factors limiting price increases. These increased expenses would add approximately £2,500 to the purchase, and buyers would be inclined to negotiate for lower prices.
Market Reactions & Outlook
Property industry commentators have noted these trends. Demand is catching up with supply and exerting downward pressure on house prices. Sellers are motivated by the upcoming stamp duty deadline, recent political uncertainty, and rising mortgage rates, but buyers are waiting because of ongoing economic concerns.
Many buyers are attempting to complete purchases before April’s stamp duty change in order to save an estimated £2,500.
Looking ahead, house prices are expected to continue their upward trajectory, but growth will likely remain tempered by economic factors such as inflation, interest rates and ongoing affordability challenges.
As the market adapts to changing buyer preferences, developers will need to keep up with the demand for homes, ensuring that new builds align with shifting trends. The outlook for 2025 suggests a steady, albeit cautious, property market.
FAQs
What will happen to UK house prices in the next 5 years?
Forecasts indicate that UK house prices are expected to rise over the next five years. Savills projects an average increase of 23.4% by 2029, adding approximately £84,000 to property values. This growth is attributed to easing mortgage rates and a persistent housing supply shortage.
Why do UK house prices keep rising?
A longstanding shortage of housing supply relative to demand has exerted upward pressure on prices. Historically low interest rates have made borrowing more affordable, increasing buyer purchasing power. Wage growth exceeding inflation has also enhanced affordability for some buyers, sustaining demand.
How do I know if my house is overpriced in the UK?
To assess if your house is overpriced, you can compare your property to similar homes recently sold in your area, hire a certified appraiser for an unbiased valuation, and consider current market trends. In a buyer’s market, overpricing can deter potential buyers.
Why is Britain’s housing becoming more unaffordable?
Housing affordability in the UK has worsened due to the price-to-earnings ratio, where the average house now costs around nine times the average earnings. Insufficient new housing developments have not kept pace with population growth, leading to increased competition and higher prices.
What will houses be worth in 2030 in the UK?
While precise predictions are challenging, current forecasts suggest a continued upward trend in house prices. If the projected 23.4% increase by 2029 materializes, the average UK house price could rise by approximately £84,000 from current levels.
Is the UK housing market stagnant?
No, the UK housing market is not stagnant. Recent data shows modest growth, with property prices experiencing a 1.9% year-on-year increase as of January 2025.
Why are UK houses so overpriced?
UK houses are considered overpriced due to high demand and limited supply. A persistent shortage of housing has led to increased competition among buyers, driving up prices. Property in the UK, especially in London, is seen as a stable investment, attracting both domestic and international buyers, further inflating prices.
Where are house prices increasing the most in the UK?
Northern regions, particularly the North West, are expected to lead in house price growth over the next five years, with forecasts predicting a 29.4% increase. This surge is attributed to more affordable prices and lower mortgage strain compared to London and the South East.
Why is demand for housing increasing in the UK?
Demand for housing in the UK is rising due to population growth and the trend of solo living. There is a growing number of single-person households, particularly among older adults, increasing the demand for smaller homes.
What is the current house price trend in the UK?
As of early 2025, UK house prices have shown modest growth. The average property price increased by 1.9% year-on-year in January 2025, with expectations of a 2.5% rise by the end of the year.
Can you negotiate house prices in the UK?
Yes, negotiating house prices in the UK is common. Buyers often offer below the asking price, especially in a buyer’s market or if the property has been on the market for an extended period. Factors such as property condition, market conditions, and seller circumstances can influence the success of negotiations.
click here for more