Asking prices for homes have hit a “new record high” this month, said The Guardian. In May, the average asking price across the country has risen to £379,517, according to Rightmove – a 0.6% increase from April.
But while spring is usually “busiest” for the housing market, things have been more “subdued” than usual in comparison to the first part of the year. This is thought to be down to the number of homes for sale, which has now hit its “highest level in a decade”.
By contrast, it was a “busy start to the year” for the housing market, said MoneyWeek, as demand rose among buyers who were racing to beat the March deadline when stamp duty thresholds were cut.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
SUBSCRIBE & SAVE
Sign up for The Week’s Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Since 1 April, first-time buyers pay stamp duty on homes worth more than £300,000, down from £425,000 previously, while home movers have seen their tax-free threshold drop from £250,000 to £125,000.
The outlook is “uncertain now that property purchase costs are higher”, said MoneyWeek, while Donald Trump‘s trade tariffs could also hit confidence.
House price predictions for this year vary between a slowdown and a slump as the market adapts to higher stamp duty costs, while some are still predicting inflation-beating growth. Some suggest prices are already dropping.
What’s happened?
Property prices may not have crashed “on the surface”, said The Telegraph. But the housing market has not recorded real price growth – “when adjusted for inflation” – since 2022.
Average house prices in real terms have fallen by around £49,000 between the first three months of 2022 and the final quarter of 2024, a drop of 15.6%, which is “favouring buyers” as sellers are losing “bargaining power” from higher stamp duty and increased supply.
Some regions are already being hit and uncertainty from Trump’s tariffs and “stock market mayhem”, said London‘s The Standard, is “set to plague London’s beleaguered housing market again this year leading to short-term price falls”.
Despite a “lull” in demand from new buyers in April, sales are still being agreed at a level 5% higher than this time last year, said Rightmove, showing “spoiled-for-choice” buyers are still willing to shell out for the “right property at the right price”.
Could history repeat itself?
Even before winning the general election, the Labour Party was “clear” that it wanted to make homes more affordable, said The Telegraph.
For homeowners and anyone who has “mortgaged themselves to the hilt to meet record house prices”, this is “at odds with house price growth”.
But while stamp duty changes “could knock market confidence”, said the HomeOwners Alliance, “it is more likely” that interest rate cuts and falling mortgage rates will help support buyer demand as well as the “anticipation of more property transactions in 2025”.
What will happen to house prices?
Despite higher property purchase costs, the consensus among experts is that house prices will still rise this year, said Which?, “with predictions far more bullish than a year ago”.
The “best estimate”, said Savills, if interest rates fall further – bringing down mortgage pricing – is average UK growth of 4%. But it is predicting a 4% drop in prime central London locations, due to higher taxes and changing non-dom rules.
Rival estate agent Knight Frank is less bullish nationally, predicting a rise in house prices of 2.5% this year, as it is unclear if the chancellor’s autumn Budget, which included changes to stamp duty and employer’s National Insurance contributions, “will work and therefore by how much rates could fluctuate in the years ahead”.
Similarly, Zoopla predicts that house price growth is “set to moderate” this year “as supply grows and the extra costs of stamp duty in England feed through into property values”.
The property website is also predicting average price growth of 2.5% for 2025, but warned that sellers “need to be careful in how they set their asking price to attract sufficient demand to agree a sale”.
