Property transactions in the UK reached a four-year peak, yet doubts arise whether the upcoming budget will cool off demand.
The UK property market is experiencing a surge in activity, with the number of transactions increasing significantly, according to recent data. Seasonally adjusted sales rose by 13% from May to June 2025, and are now 1% higher than June 2024 [1][5]. This increase in sales activity is also reflected in the number of properties under offer, which is at the fastest rate for four years and up 6% year-on-year as of May 2025.
Despite this increased activity, house price growth has been relatively subdued. Over the 12 months to May 2025, house prices increased by 1.4%, higher than the 0.3% from the previous year but down from 2% earlier in 2025 [1]. This modest growth is attributed to buyer price sensitivity and affordability challenges, particularly in higher-priced markets such as London [1].
Market forecasts indicate a gradual improvement in house price growth, with expectations of around 2% growth in 2025, downgraded from earlier predictions of around 4% [2][3]. This improvement is expected to be driven by a gradual decline in mortgage rates, with borrowers currently able to access best-buy mortgage rates below 4% [2]. However, the Bank Rate is projected to drop from 4.25% to around 3.00% by next year, which could lead to a larger decline in mortgage rates and potentially boost house prices by an above-consensus 5% in 2026, followed by 3.5% growth in 2027 [2][3].
First-time buyers are expected to be the biggest buyer cohort in 2024, accounting for 36% of all sales [6]. Currently, 80% of first-time buyers pay no stamp duty, with 14% paying a partial amount, according to Zoopla [4]. However, buyers could face higher costs if the chancellor confirms that stamp duty thresholds will be reduced in April 2025, as previously planned. Returning to previous stamp duty thresholds would be more keenly felt in southern England, particularly in London and the South East, where the average first-time buyer would pay £5,600 and £1,390 respectively, compared to nothing today [4].
The property market appears to be benefiting from lower inflation and cuts in mortgage pricing since August, when interest rates were reduced by the Bank of England [1]. Richard Donnell, executive director at Zoopla, states that possible changes to stamp duty relief will create further barriers to ownership for first-time buyers who already face significant affordability constraints [4].
In conclusion, the UK property market is experiencing a rise in sales activity, driven by factors such as easing inflation and expectations of falling mortgage rates. However, house price growth remains modest and price sensitive. The housing market is described as "turning a corner," with improving sales volumes but subdued price inflation so far [1][2][3][5]. The latest Zoopla House Price Index for October shows an annual increase of 1% in average house prices, reaching £267,500 [7].
References:
[1] HM Revenue & Customs. (2025). UK Property Transactions Statistics. Retrieved from https://www.gov.uk/government/statistics/uk-property-transactions-statistics
[2] Zoopla. (2025). Zoopla House Price Index Forecast. Retrieved from https://www.zoopla.co.uk/house-prices/forecast/
[3] Rightmove. (2025). House Price Forecast. Retrieved from https://www.rightmove.co.uk/news/property-news/articles/house-price-forecast/
[4] Zoopla. (2025). Stamp Duty Thresholds to be Reduced in April 2025. Retrieved from https://www.zoopla.co.uk/news/property-news/articles/stamp-duty-thresholds-to-be-reduced-in-april-2025/
[5] Chestertons. (2025). Property Market Update. Retrieved from https://www.chestertons.com/uk/news/property-market-update
[6] Zoopla. (2024). First-Time Buyers to be Largest Buyer Cohort in 2024. Retrieved from https://www.zoopla.co.uk/news/property-news/articles/first-time-buyers-to-be-largest-buyer-cohort-in-2024/
[7] Zoopla. (2021). Zoopla House Price Index. Retrieved from https://www.zoopla.co.uk/house-prices/zoopla-house-price-index/
- The increased activity in the UK property market, characterized by a rise in sales and properties under offer, has attracted potential investors, sparking interest in the real-estate sector.
- The gradual decline in interest rates, coupled with easing inflation, has led to a decrease in finance costs for borrowers, positively affecting the housing-market.
- Despite the improving property market, a potential increase in stamp duty costs, if the chancellor confirms the planned reduction of stamp duty thresholds in April 2025, could create further challenges for first-time buyers, particularly in the high-priced markets of Southern England like London and the South East.
