Zoopla: growth in home prices stalled in 2025 but is expected to increase by 15 percent in 2026

With over a million deals completed this year, sales skyrocketed, but buyers drove hard bargains to keep prices under control

Depending on where you live, a slight increase in valuations is anticipated for 2026.

In 2025, the number of Brits moving home reached a three-year high, but the most recent Zoopla house price index shows that this hectic buying and selling activity did not result in higher prices.

Additionally, the online property listing company predicts that house prices will only slightly increase in 2026.

According to Zooplas's calculations, there were 9% more home moves in 2025 than in 2024, even though sales agreed upon in the final quarter of the year were uncertain due to the Autumn Budget.

The market is expected to see 1.2 million transactions over 2025 as a result of rising household incomes and stable mortgage rates. This is consistent with the 10-year mean.

"2025 has been a strong year for home moves, but the Budget hit activity in the final months of the year and saw many moving decisions put on hold," stated Richard Donnell, executive director at Zoopla. We anticipate a better-than-usual start to 2026 as buyers reenter the market now that the uncertainty has subsided. A "

The three-year high in sales activity did not translate into higher prices for home sellers, though, as buyers of real estate continued to drive hard bargains in 2025.

Average cost of a house in the UK.

Zoopla reports that the average price of a house in the UK is currently 270,300. This is 1.1 percent more than it was a year ago, but it is still much less than the 3.8 percent annual average over the previous ten years and less than the 1.9 percent increase over 2024.

Due to affordability and significant differences in the cost of purchasing a home, the market is trapped in a north-south price growth divide.

Northern Ireland (6.7%) and the North West (2.9%) are seeing the fastest increases in home prices. In the meantime, prices are declining throughout the southern parts of England and by as much as -0.6 percent in London, the city with the highest stamp duty and home prices.

Donnell stated: "In order to secure sales in 2026, particularly throughout southern England, it is critical that sellers maintain realistic pricing. Before beginning their property search, homeowners who want to move in the upcoming year should know how much their house is worth and how much they can afford. The "

Prices for real estate vary by region.

With the TD postal area (Tweeddale) at 4.7 percent, Oldham (OL) at 4.4 percent, Kirkcaldy (KY) at 4.2 percent, and Falkirk (FK) at 4.2 percent, sellers in the Scottish Borders are benefiting most from price increases.

But throughout southern England, it is more of a buyer's market, especially in coastal areas where demand is being impacted by a return to office work and the additional tax on second homes.

Bournemouth (BH, -1.8 percent), Torquay (TQ, -1.9 percent), and the Truro (TR) postal area have all seen a 2.4 percent decline in home prices.

Increases in sales are driven by first-time buyers.

First-time buyers have been a major force in the 2025 home buying market due to more and cheaper mortgages; according to Zoopla, their numbers are expected to rise by 20% over the course of the year.

In 2025, first-time buyers will make up the majority of homebuyers, making up nearly two out of every five purchases (39 percent of sales). Landlords purchasing with a mortgage (7%), cash buyers (21%), and current homeowners using a mortgage (33%) come next.

According to Polly Ogden Duffy, managing director of real estate firm John D. Wood and Co., "Every aspect of the real estate market is driven by first-time buyers." When they initiate activity at the entry level, the system as a whole gains momentum, enabling chains to form and transactions to move forward nationwide.

"Many households are finding that buying is a more cost-effective option, provided they can pass affordability checks and obtain a mortgage, as the ongoing scarcity of rental properties drives rents to all-time highs. This is why the recent relaxation of the affordability requirements is such a good thing. The "

However, this does not imply that first-time buyers are purchasing more expensive homes.

According to Zoopla data, first-time buyers are looking to spend up to 5% more than they did a year ago in usually less expensive regional markets. However, due to rising stamp duty costs and flat prices throughout southern England, they are looking to purchase homes in London that are 3% less expensive than they were a year ago.

Home market projections for 2026.

Zoopla projects a 1.5% increase in average UK home prices by 2026. Due to a release of pent-up demand as buyers return to the market after postponing decisions in the run-up to the Budget, it said that 2026 will begin stronger than usual.

In 2026, it is anticipated that home prices in the Midlands, northern England, Scotland, and Northern Ireland will continue to rise at an above-average rate of more than 2.5 percent.

Higher rates of house price inflation and improved buyer affordability result from lower house prices in Scotland and northern England. Zoopla anticipates that the price inflation gap between the north and south will persist until 2026.

Additionally, Zoopla projects that between 2027 and 2029, average home prices will rise by 2.1 percent annually as housing affordability steadily recovers and boosts sales.

"The desire to move home is still strong, but affordability is still a barrier for those buying their first home or looking to trade-up to a larger home that will keep prices in check," stated Donnell, executive director at Zoopla. As we begin the new year, there will be more options for buyers because there are still many properties available for purchase. A "