UK House Asking Prices Hit Record High

The UK property market continues to demonstrate resilience in the face of recent economic challenges, with new record asking prices being set across much of the country. According to the latest data from Rightmove, the average asking price of properties coming to market has risen by 1.4% this month, equating to an increase of £5,312, bringing the new average to £377,182. 

Whilst spring typically sees a seasonal uptick in market activity, this increase is notably larger than the typical 1.2% rise observed in April. The market’s strong performance, despite the increased supply of homes and rising stamp duty, suggests that buyer and seller confidence remains high.

Market Resilience Post-Stamp Duty Increase

The stamp duty increase implemented on April 1st has not led to the anticipated mass pullback in market activity. While many buyers scrambled to complete their purchases before the deadline, the level of agreed sales falling through has remained steady. This indicates that most buyers who missed the deadline have adjusted their plans without abandoning their moves altogether. The queue of buyers waiting to complete their home purchases has dropped by nearly 24,000 or 4%, a first since the pandemic in 2020. However, this queue is starting to climb again, signalling that the market is stabilising after the stamp duty surge.

Despite the uncertainty surrounding economic factors such as global trade tensions and high mortgage rates, there has been a 5% year-on-year increase in new buyer demand. The number of new sellers entering the market has also risen by 4%. However, regional variations are evident, with the Midlands and northern regions, along with Wales and Scotland, experiencing higher price records and stronger demand, while the South East and South West have seen more subdued growth. Notably, London, despite seeing a new asking price record, faces particular challenges.

 Record average price for properties in capital but...

London has reached a new average price record for properties, driven largely by the resilience of the inner city market. While this milestone is noteworthy, it’s important to recognise that the capital’s housing market is sensitive to global economic shifts, including recent tariffs announced by US President Donald Trump. As geopolitical tensions evolve, London could experience some cooling in price growth, especially as buyer demand has been somewhat softer compared to last year. Colleen Babcock, property expert at Rightmove, pointed out that the diverse nature of the UK housing market means that national trends often mask significant regional differences. She explained, “London is likely to see greater knock-on effects from US tariffs than the rest of Great Britain, while Northern regions appear to be performing more strongly post-stamp duty rise.”

Potential Boost to Affordability

The future of the property market may depend on the speed at which the Bank of England adjusts interest rates. The current average five-year fixed mortgage rate remains high at 4.72%, only slightly lower than the 4.84% rate of this time last year. However, if the Bank of England responds to economic pressures by reducing the Bank Rate more rapidly starting in May, mortgage rates could drop more quickly, improving buyer affordability and potentially stimulating further demand in the market.

While the full impact of global events such as the US tariffs is yet to be seen, experts agree that lower mortgage rates could provide much-needed relief for buyers struggling with high borrowing costs.

Looking Ahead

As we move further into 2025, the property market remains in a state of flux, with different regions experiencing varying levels of demand and price increases. The housing market in the Midlands and North is seeing strong growth, while London faces unique challenges due to global economic factors. While the next few months may bring uncertainty, the ongoing trend of resilient buyer activity, especially if mortgage rates are reduced, could help maintain stability in the property market.

Despite challenges such as rising stamp duty, high mortgage rates, and global trade issues, the UK housing market remains resilient. Buyers and sellers are adapting to the changes, and with mortgage affordability likely to improve, the outlook for the remainder of 2025 remains cautiously optimistic. As Babcock aptly stated, “It’s difficult to predict what the next few months will bring, but if mortgage rates reduce more quickly, it would be a helpful boost to buyer affordability.”

 

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