Real estate market experiences a steep rise with the influx of spring home sales, leading to record-breaking house prices.
UK Housing Market: Stability and Competition Amidst a Changing Landscape
The UK housing market is currently experiencing a complex economic picture, with both challenges and opportunities for buyers and sellers alike. According to Rightmove's House Price Index, the average asking price of properties has seen a slight slowdown, dropping by 1.2% in July 2025, leaving prices only 0.1% higher than a year ago. However, sales agreed are 5% higher than last year, indicating a stronger buyer market amidst competitive pricing by sellers.
This trend is largely influenced by the Spring selling season, which traditionally brings increased market activity. Rightmove notes a high level of seller competition as sellers price more realistically to attract buyers, reacting to the greater availability of homes on the market in 2025 and improving buyer affordability due to lower mortgage rates and wage growth outpacing inflation. This has led Rightmove to revise its 2025 price growth forecast down from +4% to +2%, while maintaining expectations of 1.15 million transactions for the year.
The Bank of England's interest rate hikes earlier in the year had initially raised mortgage rates, which restrained price growth and buyer affordability. However, the Bank has recently cut the base rate from 4.25% to 4%, and lenders are passing on these cuts, resulting in lower mortgage payments for variable-rate borrowers. Rightmove's mortgage tracker shows two-year fixed mortgage rates have fallen from 5.34% last year to 4.53% now, improving buyer affordability and supporting increased sales activity despite modest price falls.
The state of the housing and mortgage markets varies across the UK, with disparity between regions. For instance, the North East region has seen the strongest price growth in Great Britain. Well-maintained properties with modern amenities tend to command higher prices in the current market. Sales agreed between buyers and sellers in the first four months of the year are up 17% compared to the same period in 2023.
In the commercial real estate sector, the emphasis has shifted towards the importance of location and quality over the yield on debt or cost. Aaron Milburn, UK managing director for Pepper Advantage, predicts the trend of increased house prices and buyer-seller activity will continue. However, neglected properties may struggle to attract tenants or investors in the current market.
Despite some challenges, the property sector is recovering, with rent values showing sustained growth, as stated by Daniel Austin, CEO at ASK Partners. The mortgage market is also showing signs of improvement, with mortgage arrears growth slowing to its lowest rate since September 2022's Mini-Budget.
In conclusion, the UK housing market in mid-2025 is characterized by stabilized or slightly falling prices with increased sales, shaped by a competitive Spring selling season, a high supply of homes, and recent easing in mortgage rates following the Bank of England's interest rate adjustments. Buyers currently benefit from improved affordability while sellers compete by lowering asking prices to attract interest. It is essential for potential buyers and sellers to stay informed and act accordingly to navigate this ever-changing market.
Sources: [1], [2], [3], [4], [5]
\n\n References:
- Rightmove Press Release: Rightmove Predicts 1.1 Million Completed Sales Transactions in 2025
- Bank of England: Monetary Policy Report
- Rightmove House Price Index: May 2025
- Rightmove Mortgage Tracker: July 2025
- ASK Partners Press Release: UK Property Sector Recovering
Investors are finding opportunities in the UK housing market, as the competitive pricing from sellers drives up sales activity despite a slowdown in housing-market growth. The trend is largely due to a high level of seller competition and the greater availability of homes on the market in 2025, along with improved buyer affordability due to lower mortgage rates and wage growth outpacing inflation.
In the commercial real-estate sector, the emphasis has shifted towards the importance of location and quality over the yield on debt or cost. This suggests that investors in commercial real estate should prioritize properties with desirable locations and modern amenities to attract tenants and buyers.
