“The sector can seize the opportunity to broaden access to homeownership and deliver housing solutions that truly address the affordability challenge in 2025.” – Ryan Blair, Highlight Housing
Zoopla’s latest House Price Index provides an encouraging outlook for the UK housing market in 2025, with house prices stabilising and modest growth predicted. For the affordable housing sector, these trends present unique opportunities to address housing needs and drive forward delivery.
The Market Reset and Growth Forecast
According to Zoopla, the UK housing market is now “fairly valued” after a year of steady adjustments. Strong income growth, combined with stable mortgage rates of around 4%, has meant house prices didn’t fall as much as previously predicted. By the end of 2024, house price inflation turned positive across the UK, with headline growth of +1.5%.
For 2025, Zoopla projects a 2.5% rise in house prices, with cumulative growth of 7.5% over the next three years. Regional disparities remain, with lower-priced regions experiencing above-average growth, while southern areas recover more slowly.
Affordable Housing Implications
This stabilisation and growth forecast have specific implications for the affordable housing sector, particularly in areas where demand remains high:
1. Opportunities in Regional Markets:
The report highlights stronger growth in lower-priced regions, making these areas prime candidates for expanding affordable housing delivery. For housing associations and developers, focusing on these markets can help meet local demand while taking advantage of relatively affordable land and house prices.
2. Mortgage Accessibility and Demand:
Zoopla anticipates innovations in mortgage stress testing, particularly for loans exceeding five years, which could increase accessibility for buyers. This is especially relevant for shared ownership schemes, where lower deposits and flexible mortgages can help more people get onto the housing ladder.
3. Sales Volumes on the Rise:
With a 5% increase in transactions expected in 2025, reaching 1.15 million sales, the affordable housing sector has a key opportunity to expand delivery. A growing pipeline of sales will enable registered providers and developers to secure additional Section 106 properties, addressing a critical housing need.
Navigating Challenges in 2025
As the UK housing market stabilises, 2025 presents a key opportunity for more buyers to explore shared ownership and other affordable housing tenures. While challenges such as higher stamp duty rates, set to take effect in April, may impact certain buyers, these changes are likely to drive increased interest in flexible and accessible housing solutions.
Shared ownership schemes, in particular, offer a viable pathway for buyers who might otherwise struggle with traditional homeownership. With anticipated innovations in mortgage stress testing for longer-term loans, more buyers may find it easier to access the funding required to take their first steps onto the property ladder. Affordable rent and discounted market sale tenures also stand to gain momentum as developers and housing associations respond to the evolving needs of the market.
For registered providers and housebuilders, the focus should be on promoting these options, ensuring they meet local needs, and enhancing visibility for potential buyers. By prioritising affordable tenures, the sector can seize the opportunity to broaden access to homeownership and deliver housing solutions that truly address the affordability challenge in 2025.
Looking Ahead
Zoopla’s House Price Index offers a clear indication that stability is returning to the UK housing market, creating a more favourable environment for affordable housing delivery. By focusing on regional opportunities, leveraging mortgage innovations, and responding to growing sales volumes, the sector can make meaningful progress in addressing the UK’s affordable housing shortage.
Now is the time for housebuilders, housing associations, and local authorities to collaborate and act on these opportunities, ensuring that affordable homes remain at the forefront of housing delivery in 2025 and beyond.
https://www.zoopla.co.uk/discover/property-news/house-price-index