House prices continued to show robust growth during July
In the UK, the housing market is experiencing a steady but moderate growth, with house prices showing a slight acceleration. As of May 2025, the national average house price stood at £269,000, marking a 3.9% annual increase, according to recent data. This is a slight improvement from the 3.6% increase recorded in the 12 months to April 2025.
However, transaction volumes have witnessed a decline. The estimated number of residential property transactions in May 2025 was 11.8% lower than a year earlier, and monthly transactions dropped by 25.1% between April and May 2025.
Regional variations in price growth are notable. The North East saw the highest annual price rise at 6.3%, while Yorkshire and the Humber had the largest monthly increase at 2.4%. After a period of volatility early in the year related to Stamp Duty Land Tax changes, house prices have shown a modest rebound in May, but overall transactional activity remains subdued.
Daniel Austin, CEO and co-founder at ASK Partners, attributes the subdued property price growth to high borrowing costs. However, the positive news about house prices may put borrowers in a stronger position during property negotiations. The average value of homes in July rose to £272,664, representing a 0.6% monthly increase.
The improved housing affordability is helping to ease deposit constraints for potential buyers. The house price to average earnings ratio had fallen to its lowest point in over 10 years, at around 5.75. This stronger position is believed to be keeping house prices in check. Lenders are trimming their mortgage rates to further assist borrowers.
The Bank of England's decision to hold rates offers limited reassurance, but the markets expect a further rate reduction next week. Despite persistently elevated fixed mortgage rates, which are still delaying meaningful relief, the availability of higher loan-to-value mortgages has also improved.
In other news, Platform4 has been considered a 'winning blueprint' for placemaking. Investors and developers remain motivated by the enduring supply-demand imbalance, particularly in resilient sectors such as co-living and build-to-rent. For those seeking stability amid global uncertainty, UK real estate debt continues to stand out.
However, the construction sector is grappling with soaring build costs, planning bottlenecks, and a chronic shortage of skilled labor. In a separate development, plans for four new flats in St Peter Port have been rejected.
In summary, the UK housing market in 2025 shows steady but moderate price growth amid declining transaction volumes and economic headwinds that are likely affecting mortgage approvals and housing affordability negatively. Despite these challenges, the market remains active, with investors and developers showing continued interest in resilient sectors.
Investors and developers are motivated by the enduring supply-demand imbalance in the UK real-estate market, particularly in resilient sectors like co-living and build-to-rent. Meanwhile, finance plays a significant role in property transactions, as high borrowing costs attributed by Daniel Austin, CEO and co-founder at ASK Partners, are impacting the rate of house price growth.
