Higher supply pulls house price growth down to 1.4%

UK house price inflation has slowed to 1.4%, led by falling values in London and the South, Zoopla’s house price index has revealed.

This represents a reduction from 2% earlier this year, with average prices standing at £268,400.

Tom Bill, head of UK residential research at Knight Frank, said: “The current supply glut has put downwards pressure on asking prices, which sellers must take into account if they need to transact sooner rather than later.

“Geopolitical and tariff risks appear to be fading, which points to a smoother ride for the housing market in the second half of the year, which should be boosted by at least two rate cuts.

“However, the government’s non-existent financial headroom means tax rise speculation is likely to intensify ahead of the autumn Budget in a re-run of last year.”

The average estate agent has 37 homes for sale, compared to 32 last year.

In London, the South East and South West regions of England the number of homes for sale is 16-19% higher than a year ago, while house prices are barely rising, with under 0.5% growth over the past year.

House price growth is currently fastest, at over 3.5% per annum, in parts of the North West of England and Scotland including Wigan (4.3%), Falkirk (3.8%) and Blackburn (3.6%) postal areas.

In addition to affordability factors, tax and policy changes aimed at second homeowners and landlords are leading to weaker demand and more sales by these owners, which is compounding the impact on house price growth at a localised level.

Meanwhile there is a 6% increase in sales agreed compared to a year ago.

Richard Donnell, executive director at Zoopla, said “The number of buyers and sellers agreeing home sales continues to increase year-on-year, demonstrating a continued desire of more households to move home in 2025. Improving mortgage affordability will support buying power in the second half of the year.

“However, buyers remain price-sensitive, especially in higher-value markets where the number of homes for sale has grown the most in the last year, boosting choice for home buyers. Serious sellers need to be realistic on where they set their asking price in order to achieve a sale and secure a home move in 2025.

“The market remains on track for 5% more sales in 2025 but house price inflation will remain between 1 and 2%.”

Sellers need to be realistic on pricing if they are serious about finding a buyer and moving home in 2025.

The average time to sell is 45 days, broadly in line with this time last year. This ranges from 35 days in the North East to 57 days in Wales, while all the southern regions in the UK average over 50 days due to a greater choice of homes for sale.

Over one in five homes (22%) currently listed for sale have been on the market for over six months and remain unsold, while just under a quarter (23%) have been on the market for three to six months and are yet to find a buyer.  The average time on the market for an unsold home is 75 days.

Sarah Cartlidge, branch manager at Fraser Reeves estate agent based in the North West, said: “We’re delighted to be seeing increased vendor confidence this year, with more properties coming on to the market than 2024, however, property price remains key to agreeing a sale.

“We’re always keen to emphasise to prospective vendors that they do need to price positively and realistically from the get-go, in order to secure a good buyer in good time, and to make the best first impression possible when their property hits the market.

“We know that any property can sell for the right price, taking into account the local competition and the particular characteristics of each individual home.”