The UK housing market has faced several hurdles over the last 12 months such as higher mortgage rates and a change of government, with the ending of the stamp duty holiday the latest headwind to affect the sales market. Whilst they might make for great headlines, it’s important not to overstate the impact of these events on the market and instead, see the positives.
Headwinds building after a strong rebound
The housing market has been resilient over the last year in the face of higher mortgage rates and a change of government, with the market supported by a rush of deals to beat the stamp duty tax deadline in England and Northern Ireland. Estate agents rebuilt their sales pipelines and agency revenues over 2024 and want the momentum to continue over 2025.
However, there are headwinds facing the sales market. The OBR recently halved its forecast for economic growth in 2025, from 2% to 1%, reflecting a more ‘challenging and uncertain economic outlook’. An important element of this uncertainty is how the new Trump Tariffs will impact growth across the global economy.
Managing vendor expectations is key
While the outlook is becoming more uncertain, more home buyers are trying to move home, with the most homes for sale in over seven years. Two and three-bed homes continue to sell the fastest, while the growth in supply has come from more flats listed for sale along with more larger 4+ bed family homes. More sellers mean more buyers, but it’s important that these sellers keep their feet on the ground regarding how they price their homes.
House price inflation has peaked and is set to slow over the second half of 2025, so managing customer expectations will be crucial to maintaining sales and revenues, as will choosing the right business and using the right tools to engage sellers.
Entrenched north-south divide
Underlying market conditions vary across the country following a north-south divide, which is becoming more entrenched and rooted in affordability.
The potential for price rises and sales volumes is better outside southern England, where affordability remains less of a constraint on levels of activity. In northern England and Scotland, buyer demand is running well ahead of the growth in supply, supporting price inflation and sales.
In contrast, the stock of homes for sale is in line with or outpacing the growth in demand across southern regions. This is being amplified in second home hotspots by doubling in council tax in many areas.
Three reasons to be optimistic
Despite the market headwinds, there are still reasons to be positive:
Earnings growth is holding up strongly and running well ahead of the growth in inflation which is helping to reset housing affordability for more buyers. We just need mortgage rates to start falling to inject more life into buyer demand to support sales. Much depends on the outlook for base rates, which are expected to start falling later this year and into 2026.
Likely easing in mortgage regulations – Even without much change in mortgage rates, we expect some easing in mortgage regulations, which have capped buying power for many buyers, especially first-time buyers. Some lenders are starting to reset where they stress test new borrowers, which will help with affordability and buying power. Ideally, we need the financial regulators to agree to industry-wide changes so the whole industry moves together. This won’t lead to a house price boom but should open up the sales markets to more households, improving their ability to buy.
Stamp duty impacts manageable – the ending of stamp duty relief has attracted a lot of media attention, with headlines over-stating the impact on the market. Our analysis shows 60% of first-time buyers will still pay no stamp duty from April. The impacts are greater for those buying in London and the more expensive parts of south east England. Four in five homeowners will pay more stamp duty, up to a maximum of £2,500. This is c1% of the average property value where buyers will look to split the cost with sellers through more competitive bids.
Overall, the sales market is still on track for 5% more sales in 2025 with 1.15m sales. This is slightly below the longer run average for sales (1.2m).
At Zoopla, we’re focused on getting the market moving to hit this number and ensuring a continuous pipeline of serious sellers for agents. The four million homeowners that have now subscribed to MyHome to track the value of their home are a crucial component of this. This means agents are introduced to higher-intent vendors when they decide to sell, who are informed about realistic, achievable prices they can secure for the sale of their homes. And we’re just getting started, with lots more exciting innovations to come in this space in the near future.
Richard Donnell is Executive Director – Research at Zoopla .
Read the orginal article: https://propertyindustryeye.com/opinion-uk-housing-sales-outlook-post-tariffs-and-taxes/
