According to Zoopla’s House Price Index, semi-detached houses saw their largest increase – at 2.6% year-on-year to £452,300.
This was followed by terraced homes, which rose 2.1% year-on-year to £240,200, and detached houses, which grew by 1.5% annually to £452,300.
Zoopla said growth is weakest in the South of England, where prices are rising by less than 0.5% across London, the South East, the South West and the East of England.
House price increases range from 1.4% to 7.9% in Northern Ireland, and in the North West, prices are 3.1% higher year-on-year.
“Higher stamp duty costs since April, combined with affordability pressures, are holding back growth in the South. For buyers in other regions, however, these challenges are proving less of a barrier,” the firm said.
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Buyers have returned to market but Budget rumours concerning
Zoopla said UK homebuyers had “returned to the market in strength” over the past two years, which had driven a “steady recovery in housing sales”.
The average estate agent has 36 homes for sale, which is 20% up on 2023 and 8% up on last year.
However, the firm warned that speculation about possible tax changes had started to impact activity, with buyer demand and new listings for homes over £500,000 down compared to a year ago, as buyers adopt a wait-and-see approach for the Autumn Budget.
Rumours have been circulating that Chancellor Rachel Reeves will scrap stamp duty and replace it with an annual property tax on homes worth over £500,000.
Zoopla said that currently, one in three homes for sale were priced above £500,000 and 8% were over £1m.
However, over the past five weeks, buyer demand for £1m-plus homes has fallen 11% year-on-year and demand for properties over £500,000 has fallen 4%.
The report noted that there are 9% fewer £1m-plus homes for sale and 7% fewer £500,000-plus homes coming to market.
Zoopla said demand and supply in the rest of the market were “broadly in line with last year”, which suggests that speculation about possible Budget changes is “mainly affecting higher-value properties”.
“London and the South East have the largest share of homes priced over £500,000, so the impact of this uncertainty is likely to be felt most strongly there in the weeks ahead,” it said.
Zoopla said the markets with average prices below £200,000 are seeing the fastest growth, up 2.8% on average, whereas in areas where homes average more than £500,000, prices are barely moving.
Mortgage rate stability positive for market
The report said “greater stability in mortgage rates has helped drive the recovery in housing market activity.”
Zoopla noted that average rates for a five-year fixed rate sit between 4% and 5%, depending on loan size.
It said buyers are “finding it easier to borrow”, pointing to changes in affordability rules allowing them to borrow around 20% more than they could six months ago at the same mortgage rate and on the same income.
“This shift has boosted demand in recent months, particularly among first-time buyers and in more affordable housing markets,” Zoopla noted.
Autumn Budget likely to slow buyer momentum
Zoopla said housing activity has been on the rise for the past 18 months, but this “momentum is likely to level off in the coming weeks as uncertainty around the Autumn Budget affects buyer confidence”.
It explained: “Speculation around tax changes is nothing new, but this year, the rumours have been more prominent, and the market is already showing signs of a reaction.
“Demand and new listings for higher-value homes are weaker, driven partly by hopes of saving on stamp duty and partly by concerns over possible new taxes. By contrast, activity in the wider market is holding steady compared with last year, with the strongest price growth in more affordable areas – underlining the North/South divide.
“With the Budget just two months away, it’s worth remembering that moving home typically takes 6-7 months from offer to completion. For serious buyers, waiting for certainty could mean missing out on opportunities in the meantime.”
