UK Property Market 2025 - Signs of a Slow Recovery

Introduction

After two turbulent years marked by rising interest rates and cautious buyers, 2025 is showing early signs of stability in the UK property market. While prices remain below the 2022 peak, demand has started to recover across key regions as mortgage rates ease and confidence returns.

Market Overview

According to major property indices, average house prices fell by around 2-3% in 2024 but are expected to edge up slightly this year. London and the South East continue to lag behind more affordable regions such as the Midlands and the North West, where buyer activity has remained resilient.

First-Time Buyers Return

As mortgage lenders reintroduce competitive fixed-rate products, first-time buyers are slowly re-entering the market. Many are prioritising energy-efficient homes or properties with potential for long-term value growth rather than quick gains.

Outlook

Industry analysts expect a modest 1-2% price increase by the end of 2025, with demand driven by lower borrowing costs and a more balanced supply of homes. For landlords and investors, steady rental yields remain a key attraction despite tighter regulation.