UK Housing Market 2025: Where’s Hot and Where’s Not for Investors?

As we enter 2025, the UK housing market has shown strong signs of growth, outpacing previous years. According to Zoopla’s latest findings, buyer demand has surged by 13%, with a notable 10% increase in homes for sale, providing a more dynamic environment for property investors. This boost in activity is contributing to a modest house price inflation of 2% year-on-year, up from a slight dip of -0.9% the previous year, indicating a steady recovery.

Regional Performance: North vs South

The latest data highlights a marked contrast in house price growth between the North and South of the UK. Northern Ireland and the North-West have recorded the highest growth rates, with house prices up by 7.7% and 3.2%, respectively. Meanwhile, regions in southern England, such as London, the South East, and the South West, have seen more modest growth, with house prices rising by less than 1.5% in the past 12 months.

The standout performers include Wigan in the North-West, where prices have risen by 5.6%, and Motherwell in Scotland, with a 4.9% increase. These areas are benefitting from above-average growth in local jobs, making them increasingly attractive for property investors seeking affordable entry points with promising future returns.

The Impact of Stamp Duty Changes

Zoopla also notes that the government's decision to phase out temporary stamp duty reliefs by April 2025 has already had a significant impact on the market, particularly among first-time buyers (FTBs). There has been a sharp uptick in demand from FTBs in the £300,000 to £625,000 price range, where stamp duty costs will increase the most after the upcoming changes. Demand from first-time buyers surged by over 30% in November and December 2024 in these price bands, especially in areas like London and the South East, where the potential stamp duty savings are particularly substantial.

Despite concerns that the stamp duty change could create a cliff-edge effect, Zoopla’s data suggests these worries may be overstated. First-time buyer demand remains strong year-on-year, a positive sign for the overall market. Homeowners are also responding to the upcoming changes, though to a lesser degree. The increased stamp duty costs for homeowners from April, which range up to £2,500 per purchase, are less significant than the increases faced by first-time buyers in the mid-price bands.

Outlook for the UK Property Market in 2025

The 2025 UK property market looks set to maintain its upward momentum, though with regional variances. As mortgage rates edge higher, the pace of house price inflation is expected to slow, especially in the more expensive southern regions. However, the continued demand in high-growth areas in the North and Midlands, coupled with increased supply, creates a favourable environment for investors.

The market’s resilience in the face of rising costs and political uncertainties is a positive signal for long-term investors. For those focused on building a portfolio, now is an opportune time to explore regions like Wigan, Motherwell, and other high-growth areas where demand continues to outstrip supply.

Why Investors Should Pay Attention

As a property investor, understanding the regional dynamics of the UK housing market will be key in 2025. With the North and Midlands outperforming the South in terms of price growth, there is an opportunity for investors to target areas with strong job growth, rising demand, and more affordable entry points. The removal of stamp duty reliefs will also create a wave of demand in certain price bands, providing an additional layer of opportunity.

At Magnate Assets, we remain committed to providing you with the latest insights and investment opportunities in the UK property market. As 2025 unfolds, we will continue to keep you informed of key trends, helping you make the most of the evolving landscape.