Is UK House Prices Record High Growth Sustainable?
UK house prices have reached a record high, with the average asking price rising to £379,517 in May which reflects an increase of 0.6% from April, according to data from Rightmove. While this marks a new peak, the overall pace of market activity has been less robust than expected for the spring season, typically the most dynamic period for property sales. An influx of homes for sale has fundamentally contributed to this trend, with supply now at its highest level in ten years, giving buyers more options and softening the urgency to purchase.
The latest UK House Price Index (HPI) for March 2025 reveals a 1.1% monthly and 6.4% annual increase in property values, bringing the average UK home price to £271,000. England saw slightly stronger growth at 1.3% month-on-month and 6.7% year-on-year. However, regional disparities were significant: the North East led with a 14.3% annual rise, while London trailed with just 0.8% growth and a slight 0.3% monthly decline.
The market’s spring slowdown followed a surge in early-year activity, as buyers rushed to complete purchases before stamp duty changes came into effect on 1 April. These changes reduced the tax-free thresholds, raising costs for both first-time buyers and movers. Consequently, while current asking prices are at record highs, inflation-adjusted figures show a real-terms decline of around £49,000 or 15.6% since early 2022. Nonetheless, sales agreed in April were 5% higher than the same time last year, suggesting buyers remain active, though far more selective focused on fairly priced properties that meet their needs.
Asking prices climb to new highs despite subdued activity, rising supply, and growing uncertainty.
Looking ahead, the outlook for house prices remains uncertain. External economic pressures including US President Donald Trump's renewed trade tariffs and continued volatility in global markets could weigh on consumer confidence. Meanwhile, experts are divided in their forecasts. Savills anticipates 4% national house price growth in 2025, assuming interest rates and mortgage costs continue to ease. However, it also predicts a 4% decline in prime central London due to tax changes and tightening rules for non-domiciled residents. Conversely, Knight Frank and Zoopla offer more cautious national projections of 2.5% growth, citing concerns about stamp duty impacts and increased housing supply.
The latest figures from HM Land Registry also point to resilience in market activity. Residential property transactions jumped to 177,000 in March 2025 up over 100% from the same month last year suggesting buyers are still willing to act under the right conditions. Ultimately, the broader market context tells a more complex story. With affordability stretched, a sharp rise in supply, and inflation-adjusted values declining, sellers may need to temper expectations. Buyers are still active, but more selective—driven by value, not urgency. As the market continues to adjust to tax changes, economic headwinds, and shifting demand, pricing strategies and regional differences will play a critical role in shaping outcomes for the rest of 2025.
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