Homebuyers re-emerging following unexpected local property tax jolt, according to RICS data
In the heart of 2025, the UK housing market is exhibiting a steady growth trajectory, characterised by a rise in demand and supply.
**Current State of the UK Housing Market**
As of May 2025, the average UK house price stood at £268,400, marking a 1.4% increase over the past year. According to the UK House Price Index, house prices have risen by 3.9% annually by May, with a 1.1% increase from April to May [1][3]. However, the number of property transactions in May was lower than the previous year, decreasing by 11.8% annually and 25.1% between April and May on a seasonally adjusted basis [3].
**Regional Variations**
The growth rates vary across regions. For instance, Yorkshire and the Humber saw a 2.4% monthly increase in house prices, while the North East experienced a 6.3% annual increase [3].
**Predicted Future Trends**
Several factors are expected to shape the housing market for the remainder of 2025. Lower mortgage rates, due to recent reductions in the Bank of England base rate, are likely to boost purchasing activity, potentially leading to price increases of up to 3.5% by the end of the year [2][4]. The market is also anticipated to remain stable, with rising supply and sustained demand contributing to moderate price growth.
**RICS Survey Findings**
The Royal Institution of Chartered Surveyors (RICS) regularly polls its members each month to gauge the housing market's mood. The latest survey indicates a broadly flat landscape for sales volumes over the next 12 months, with a net balance of +5%. The near-term expectations for sales volumes have turned marginally positive, with a net balance of +6% expecting more activity in the next three months.
Despite the improvement in buyer demand, sales activity remains subdued. The RICS report suggests that house prices continue to follow a flat to marginally negative trend, with the net balance for June remaining at -7%.
**Market Analysis**
Tarrant Parsons, head of market research and analysis for RICS, stated that the UK residential market appears to be entering a more settled phase. He attributes this to the earlier distortion caused by transactions being brought forward ahead of the stamp duty changes having largely dissipated, allowing underlying trends to re-emerge.
Tom Bill, head of UK residential research at Knight Frank, echoes this sentiment, stating that demand is recovering after the March stamp duty deadline meant transactions were pulled forward into the first quarter of the year.
The latest Halifax House Price Index for June suggests house price growth was flat on a monthly basis compared with a 0.3% dip in May, while annual price inflation slowed from 2.6% to 2.5%.
In conclusion, while there is optimism due to reduced mortgage rates, economic uncertainties and regional variations will continue to influence the UK housing market in 2025.
[1] UK House Price Index: https://www.ons.gov.uk/property/housepriceindex [2] Bank of England base rate: https://www.bankofengland.co.uk/monetary-policy/interest-rates [3] RICS UK Residential Market Survey: https://www.rics.org/uk/knowledge-insight/rics-market-research/rics-uk-residential-market-survey/ [4] Halifax House Price Index: https://www.halifax.co.uk/mortgages/lending/house-prices/house-price-index/
- In light of the UK housing market's steady growth, individuals are increasingly interested in investing in real-estate, with an eye on both the property market and home-and-garden sectors.
- As the housing market exhibits a resurgence in demand and supply, many financial institutions are offering competitive mortgage rates to assist prospective homebuyers, thereby influencing the lifestyle choices of families and individuals alike.
- With the housing market's projected stability and moderate price growth, the lifestyle choices of homeowners and renters alike could be significantly impacted, as the market's prospects for the remainder of 2025 remain optimistic despite lingering economic uncertainties.
