The UK residential property market has experienced significant fluctuations over the past few years, influenced by a myriad of factors including economic conditions, government policies, and global events. As of early 2025, the market presents a complex landscape for buyers, sellers, and investors alike.
The UK economy is not performing well and global pressures on the UK are growing making the Chancellor of the Exchequer take additional moves in a Spring statement to cover gaps in expenditure and shortfalls in tax revenues. The Office for Budget Responsibility has cut its short term growth forecasts by 50% leaving little room for manoeuvre.
Market Trends and Prices
However, the UK property market continues to show resilience despite economic uncertainties. House prices have seen a moderate increase, with the average UK property price now standing at approximately £290,000. This represents a year-on-year growth of around 3%, a slower pace compared to the rapid increases observed during the pandemic years. London remains the most expensive region, with average prices exceeding £500,000, while the North East and Wales offer more affordable options, with averages around £160,000 and £200,000 respectively.
Demand and Supply Dynamics
The demand for residential properties remains robust, driven by a combination of factors such as low-interest rates, a strong labour market, and a growing population. However, supply constraints continue to challenge the market. The construction of new homes has not kept pace with demand, leading to a persistent shortage of available properties. This imbalance has been exacerbated by planning delays and rising construction costs, which have hindered the ability of developers to deliver new housing stock.
Government Policies and Initiatives
The UK government has introduced several measures to address the housing crisis and support the property market. The Help to Buy scheme, which has been extended until 2026, continues to assist first-time buyers in getting onto the property ladder. Additionally, the government has committed to building 300,000 new homes annually, although achieving this target remains a significant challenge and looks unlikely to be achieved.
Stamp duty reforms have also been implemented to stimulate the market. The threshold for stamp duty has been raised, reducing the tax burden on buyers and encouraging more transactions. A stamp duty discount ended on 31st March and it remains to be seen if those who failed to meet the “cliff edge” deadline continue with their plans, attempt to renegotiate or withdraw from the market.
Furthermore, there are ongoing discussions about introducing incentives for energy-efficient homes, aligning with the UK's broader environmental goals.
Residential Lettings
Huge new legislative changes will be introduced during 2025 with plans to end fixed term tenancies and the ability for landlords to exercise so called “no blame” evictions.
Many other elements in the new Renters Rights Bill will place additional burdens and responsibilities on landlords. We are working closely with our clients and keeping them informed.
Regional Variations
The property market in the UK is highly regionalised, with significant variations in price trends and demand across different areas. While London and the South East continue to attract high levels of interest, other regions such as the Midlands and the North West are experiencing growing demand due to their relative affordability and improving economic prospects. Cities like Manchester, Birmingham, and Leeds are becoming increasingly popular among both domestic and international buyers.
Future Outlook
Looking ahead, the UK residential property market is expected to remain stable, with moderate price growth and sustained demand. However, several factors could influence the market's trajectory, including potential interest rate hikes, changes in government policy, and broader economic conditions. Investors and buyers should remain vigilant and consider both the opportunities and risks associated with the current market dynamics.
In conclusion, the UK residential property market in 2025 is characterised by steady growth, regional disparities, and ongoing challenges related to supply and affordability. As the market continues to evolve, stakeholders must navigate these complexities to make informed decisions. As always our experienced team are here to assist.
Yours
Darren Murphy
