£800,000 £1,148,814 -7.6%
£640 £42.2bn 16,553
Source: Dataloft by PriceHubble, Bank of England, HMRC, ONS
STEADY GAINS
Better mortgage rates and improved affordability are supporting growing buyer confidence. Although market activity remains encouraging, a muted economic outlook, more properties for sale and ongoing price sensitivity suggest house price growth will be steady low levels.
MARKET OUTLOOK
CPI inflation rose by 3.6% in the 12 months to June 2025, up from 3.4% in May¹. Inflationary pressures remain, and the average rate of inflation for 2025 is now expected to be 3.2%, higher than the 2.8% forecast at the start of the year². Markets are currently pricing in two more Bank Rate cuts this year, which would help further stimulate market activity. The economy and house prices are inextricably linked, and GDP growth for the year is forecast at a more muted 1.1% in 2025², just strong enough to support modest house price growth. Mortgage rates have improved, boosting confidence in the market. The average 5-year fixed rate peaked at 5.7% in July 2023 and has now fallen to 4.3% by May 2025³. Some lenders are now offering sub-4% deals, although these typically require a large deposit, often at least 60% LTV. Encouragingly, the swap rate, an indicator of future mortgage pricing, has hovered around 4% for some time but recently dipped to 3.7%. This suggests further declines in mortgage rates are possible, and sub-4% deals may become more widely available.
AFFORDABILITY BOOST
The combination of slower house price growth, strong earnings growth, and better mortgage rates has helped improve affordability. Affordability is best judged by the proportion of household income it takes to meet mortgage payments on a first-time buyer average price. For the UK, this is currently at 18%, down from a peak of 21% in December 2023, and almost back in line with its long-term average 4 . A rebalancing of affordability in the more expensive southern regions should help support price growth, which has so far been more subdued than in other parts of the country.
MODERATE PRICE GROWTH
The average house price rose to £268,652 in May, a 3.9% year-on-year increase and a 1.1% monthly rise from April¹. London was the only region to see a slight decline in prices between April and May. Rightmove has revised its house price forecast for 2025 from +4% to +2%, as the decade-high level of supply and therefore competition amongst sellers continues to limit price growth.
Across the prime markets of England and Wales, the average price of a property is £1,148,814, down -7.6% compared to the same time last year.
SOLID ACTIVITY
Market activity has been solid in 2025, with interest rate cuts providing a boost to sentiment, and more of this impact could be seen in the second half of the year. Even after the stamp duty deadline, buyer demand is up 11% year-onyear, while agreed sales are up 8%5 . There were 64,167 mortgage approvals in June, 5.6% higher than a year ago and broadly in line with the 5-year average from 2020 to 2025³. Transaction levels also continue to recover. There were 93,530 transactions in June, a 13% monthly increase and up 1% year-on-year6 , with current volumes on track to reach 1.1 million transactions this year. In the latest RICS survey, a net balance of +6% of surveyors expect sales activity to pick up over the next three months, suggesting a very gentle recovery.
¹ONS, ²HM Treasury Consensus Forecast, ³Bank of England, PriceHubble, 4PriceHubble, ONS, Bank of England, Nationwide, 5Zoopla, 6HMRC
£557,000
£800,696 +3.3%
£370
£534,000
£717,498 +0.3%
£376
£581,000
£763,442 -0.7%
£382
£480,000
£615,479 -2.7%
£335
£730,000
£967,676 -7.4%
£476
£922,000
£1,289,133 -6.5%
£566
£422,000
£554,391 -0.9%
£294
£513,000
£678,426 -1.9%
£348
£529,000
£691,724 -1.3%
£334
£800,000
£1,064,215 -3.8%
£521
£1,500,000
£2,354,651 -16.2%
£1,182
Source:
£282,462
£800,000
£1,148,814
£237,049 £737,000
£1,094,424
Source: Dataloft by PriceHubble, Land Registry.
£275,935
£658,000 £903,866
£433,315
£1,020,000
£1,477,520
£227,987 £679,000
£1,029,167
£293,038 £809,000 £1,158,419