Going Up

The UK property market showed renewed momentum in May 2025, with agreed house sales reaching their highest level in four years. According to Zoopla's latest House Price Index the number of sales agreed increased by 6 per cent compared to the same period last year, driven by improved mortgage rates, more listings, and growing buyer confidence. This rebound followed a brief dip in April, attributed to the end of temporary stamp duty relief and the Easter holiday lull.

UK average up

The average UK house price now stands at £268,250, marking a 1.6 per cent annual increase - equivalent to £4,330. While prices remain relatively stable, increased activity is being supported by a rise in the number of homes for sale, which is up 13 per cent year-on-year.

Slower southern growth

London’s market mirrors the broader southern trend of slower growth. The capital has seen a 17 per cent increase in listings over the past year, contributing to more subdued house price inflation - less than 1 per cent annually. For homeowners and sellers in London, this suggests a more competitive landscape, with buyers benefiting from greater choice and increased negotiating power.

Strongest in midlands and northern regions

In contrast, northern regions of England, the East Midlands, and Scotland are experiencing the strongest growth in both sales and prices. More affordable housing in these areas is driving higher demand, with annual house price growth reaching 3 per cent in parts of the North West and nearly the same in Scotland.

At a city level, price changes vary significantly. Markets such as Blackburn and Belfast have seen prices rise over 5 per cent, while others, including Brighton and Aberdeen, have registered small declines.

The housing market is adjusting to the end of temporary stamp duty relief and a return to more stable lending conditions, with most buyers now securing homes at around 3 per cent below asking price - a figure that has held steady in recent months.

Homebuyers, renters and landlords

For homebuyers, the current environment presents improved borrowing power due to changes in affordability testing* and access to sub 4 per cent mortgage rates. Renters may also benefit if increased housing stock reduces pressure on rental demand, while landlords could face growing competition amid a more balanced market.

Going forward

The outlook for 2025 remains cautiously optimistic. Forecasts suggest house price inflation will remain around 2 per cent for the year, with total sales volumes expected to rise by approximately 5 per cent compared to 2024. As affordability continues to shape market activity, regional disparities are likely to persist - offering opportunities and challenges across the UK housing landscape.

Source: Based on date from Zoopla's May 2025 House Price Index 

*In March, the Bank of England changed it's guidance, removing the requirement on lenders to stress test borrowers at the Standard Variable Rate plus 1% - provided that borrowers take on a fixed rate agreement of less than five years. 

 

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