House price index February 2025: Market insights for buyers and sellers
TheHub@Druce- •
- 11 Mar 2025
House price index February 2025: Market insights for buyers and sellers
Implications for Home Sellers
Sellers are facing a more competitive market, with a notable 11% increase in the number of homes coming to market. Although demand remains strong, especially for larger homes, the growing supply means that sellers must be more strategic in their pricing. The value gap between houses and flats has reached a 30-year high, with houses now nearly twice the price of flats. Over the past five years, the value of houses has increased by 24%, significantly outpacing the 7% growth in flats. Sellers should be aware of these dynamics and price their properties competitively to attract buyers who are still prioritising houses.
Insights for Buyers
Buyers are benefitting from increased housing stock, with sales agreed up by 10% year-on-year. The market is seeing a rapid rise in the number of flats coming to market, with 14% more flats listed compared to a 5% increase in houses. Despite this, buyers are still leaning towards houses, valuing the additional space and long-term investment. With mortgage repayments for flats currently 43% lower than rental costs, flats remain an attractive option for some buyers, though the price gap continues to favour houses.
Given the anticipated rise in buying costs from April 2025, including higher stamp duty rates, buyers should consider factoring these increases into their purchasing decisions. Strong earnings growth continues to support market activity, but the greater supply of homes should help keep price inflation in check.
Stamp Duty Impact
The upcoming stamp duty changes, effective from April, are expected to impact nearly half of all buyers, particularly first-time buyers. Around 40% of first-time buyers will face higher stamp duty, reducing their purchasing power. This may lead buyers to reassess their budgets and offers, slowing price growth and further widening the price gap between houses and flats.
Market Outlook
While house price inflation has slowed, the housing market is still active, bolstered by strong earnings growth and more homes coming to market. However, the surge in flat listings and the continued rise in supply should help moderate price increases. Buyers and sellers alike will need to adapt to these changes, keeping an eye on the potential impact of rising mortgage costs and the stamp duty changes.
In conclusion, the UK property market is in a period of transition, with more homes available and price inflation showing signs of slowing. Both buyers and sellers should remain agile and factor in the impact of upcoming financial changes.
Data source: Zoopla House Price Index in February 2025
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