House sales are expected to accelerate over the next four months as buyers seek to benefit from tax breaks that are due to run out in April 2025, according to the online property website Zoopla.
The number of home sales increased across the UK this year, pushing up prices by 1.5% in the year to October. Next year prices are expected to rise by 2.5% and transactions will jump by 5%, the website said.
Rachel Reeves said in the budget that the zero-tax stamp duty threshold in England would drop from 1 April next year to £125,000 from £250,000 and for first-time buyers from £425,000 to £300,000.
First-time buyers in higher-priced areas of England are expected to be most affected. In London, only 8% of homes for sale will be stamp-duty free for first-time buyers from next April. It rises to 24% in the south-east, and 32% in the east of England, according to separate data from property website Rightmove.
“Before the autumn budget, first-time buyer demand in London was 28% ahead of last year – now, it is 31% ahead,” Rightmove said.
Zoopla said sales were on course to hit 1.1 million during 2024 – 10% higher than in 2023.
The rise is mainly due to pent-up demand during the summer before the budget in October. An ageing population and an increase in the cost of running a home, forcing many families to downsize, and the trend for hybrid working would continue to affect moving decisions, said Zoopla.
Rising incomes have also helped buyers cope with a significant increase in mortgage rates over the past two years, paving the way for continued modest growth in house prices.
Stronger buyer demand would normally lead to a much larger increase in prices, but the supply of homes has surged in recent years, helped by former rental properties and second homes coming on to the market.
Richard Donnell, Zoopla’s executive director, said each estate agent had on average 34 unsold properties in their books compared with 28 before the pandemic in 2019.
House prices in the Midlands, northern England, Scotland and Wales are likely to outperform the UK average next year, while home prices in southern England, where property affordability pressures are more acute, will lag behind, according to Zoopla’s forecast.
Donnell said: “Higher income growth and lower mortgage rates have helped reset housing affordability faster than many expected over 2024.
“This has supported an increase in the number of sales and house prices over the year which we expect to continue over 2025.
“First-time buyers will remain an important buyer group, but existing homeowners looking to move will need more support to help realise their ambitions, with more and more having to look further afield to find better value for money.”