UK Property Market: A Summer 2025 Overview

The UK property market is currently experiencing a dynamic period, characterised by a shift towards a "buyers' market," increased property stock, and significant legislative changes impacting landlords. While house prices are seeing some modest growth overall, there are notable regional variations and a clear emphasis on realistic pricing for sellers.

Here's a summary of the latest trends and what they mean for you:

House Prices: A Mixed Picture with a Buyer's Edge

Recent data from Rightmove indicates a national dip in asking prices during July, with a 1.25% fall. This marks the largest reduction in asking prices recorded by Rightmove in 20 years, even accounting for the traditional summer slowdown. London has seen more severe reductions, particularly in inner postcodes. This suggests that sellers are having to adjust their expectations to attract offers in a more competitive environment.

However, it's not all downward trends. Zoopla reports that UK house price growth is slowing to +1.4% year-on-year to May 2025, but that sales are being agreed at the fastest rate in four years. This indicates that while prices might be adjusting, there's still a healthy appetite among motivated buyers. Affordable markets are seeing faster price rises, with areas in the North West of England and Scotland experiencing over 3.5% annual growth in some postcodes. Conversely, more expensive markets, especially in London and the South East, are seeing slower growth or even price falls.

Savills has even upgraded its five-year UK mainstream house price forecast, expecting 2.5% growth in 2024 and 21.6% by the end of 2028, primarily due to easing mortgage costs. This longer-term outlook suggests underlying confidence in the market's trajectory.

Mortgage Rates and Affordability

Mortgage rates have eased from their 2024 peaks, though they remain higher than the ultra-low rates seen in previous years. Analysts are predicting potential base rate reductions by the Bank of England throughout 2025, which could further ease borrowing costs. This improved affordability is a key factor underpinning demand, particularly for first-time buyers who are reportedly returning to the market at pre-stamp duty change levels.

The Impact of Legislative Changes: A New Era for Landlords

The property market is currently navigating a "triple wave of changes," with significant impacts on landlords, taxation on second homes, and stamp duty.

The Renters' Rights Bill is causing a stir, with new rules designed to make the sector far more renter-friendly. These include stricter regulations on rent increases, simplified tenancy agreements, and the abolition of no-fault evictions. Understandably, this is leading some landlords to consider selling their properties, contributing to the increased stock on the market. Knight Frank notes that the prospect of tougher green regulations and rising mortgage costs are also squeezing supply as some landlords opt to sell.

Furthermore, taxes on second homes are increasing, with councils now permitted to double tax on these properties. This move aims to address the UK's housing stock shortage and has prompted many second-home owners to sell.

Regarding Stamp Duty, recent changes have shifted the brackets, meaning more properties now incur Stamp Duty. This has had an immediate impact on home buyers, leading to a "buyer's paradise" in many postcodes where discounts of over 15% to asking prices are becoming average. This change, coupled with the increased supply, is giving buyers significant negotiation power.

What Does This Mean for You?

For Sellers: The key message is clear: realistic pricing is paramount. With more homes on the market than a year ago (a decade-high level of stock per estate agent, according to Rightmove), buyers have more choice and are discerning. Over-optimistic initial asking prices are at risk of being overlooked. Engaging with your estate agent to set a competitive and realistic price is crucial to attracting offers.

For Buyers: This is an "extraordinary buyers' market." There's more choice, improved affordability due to easing mortgage rates, and the potential for negotiation on asking prices. While stamp duty changes have introduced new costs for some, the overall environment favours those looking to purchase.

Commentary from Richard Cleaver, Head Of Residential at Shouler & Son:

"It's certainly an interesting time in the property market. We're seeing a clear shift in dynamics, moving from the heated conditions of the past few years to a more balanced, and in many ways, healthier market.

The increase in available properties is fantastic news for buyers. For a long time, supply has been a major constraint, and having more choice allows buyers to take their time and find the right property without feeling pressured into rash decisions. This, coupled with the easing of mortgage rates, is making homeownership more accessible for many, particularly first-time buyers.

However, for sellers, the message is equally clear: pricing correctly from the outset is vital. The days of simply putting a property on the market and expecting it to sell at a premium are largely behind us. Buyers are well-informed and will quickly identify an over-priced property, leading to longer marketing periods and potentially lower offers down the line. We are advising our clients to listen carefully to our market insights and set a price that reflects the current competitive landscape. Those who are realistic are seeing strong interest and achieving successful sales.

The legislative changes, particularly the Renters' Rights Bill and the increased second home taxes, are undeniably reshaping the rental sector. We've seen some landlords decide to exit the market, which contributes to the sales stock. While these changes are designed to protect tenants, we must continue to monitor their long-term impact on the supply of rental properties. A healthy rental market is crucial for the overall housing ecosystem.

Overall, while there are adjustments taking place, the underlying desire to move and invest in property remains strong. We continue to see active buyers and sellers, and by providing expert guidance and honest advice, we can navigate these changes successfully for our clients."

In conclusion, the UK property market in mid-2025 is characterised by increased stock, a more discerning buyer, and a need for sellers to be realistic on pricing. While legislative changes are reshaping the rental landscape, the overall outlook for house prices remains one of modest growth, with affordability improving for many due to easing mortgage rates.