Today the UK House Price Index saw UK average house prices rise just 1.7% in the year to October 2025, but saw a monthly decrease of -0.1%, following a September monthly decrease of -0.6%. The average price of a property in the UK in October 2025 was valued at £270,000.

Stacy Eden, head of real estate at RSM UK, comments: “Today’s UK House Price Index reveals a disappointing 1.4% annual rise in average house prices, but continues to show a monthly decline of 0.1%.”

The Royal Institution of Chartered Surveyors’ (RICS’) October 2025 UK Residential Market Survey reported that the sales market remains subdued, with measures of buyer demand and agreed sales in negative territory. Additionally, The Bank of England’s Money and Credit October 2025 release reported that mortgage approvals for house purchases, an indicator of future borrowing, decreased by 600 to 65,000 in October and the Bank of England’s Agents’ summary of business conditions - 2025 Q3 reported a subdued housing market, in which demand has weakened, and supply improved in part due to landlords exiting the rental market

Stacy continues: “During October and the run-up to the Budget, the uncertainty from government around taxes on housing values possibly replacing Stamp Duty, and on landlords’ rental income, some of which came to fruition in the form of an increase of 2% tax on rental income and higher taxes on properties worth more than £2m, has all resulted in a stagnated market. The question is will buyers feel positive about the market and future economic growth and stability in 2026 and beyond. There are positive signs ahead with declining interest rates and possibly less uncertainty domestically and globally. Inflation falling to 3.2% today, means we are confident of interest rates declining to 3-3.5% in 2026. Additionally sustainable rental growth in some regions of over 5% is a positive sign that landlords will continue to receive rental returns from their properties. Rental growth was 4.4% in the UK for the year to November and 8.4% in the highest region, the North-East.

“The biggest change is again seen in London, where house prices are the highest in the UK, and are therefore most affected by the government’s focus on taxing wealth through IHT and non-dom tax changes, as well as higher taxes on high valued homes. London experienced a 2.4% fall in house prices over the year to October 2025, and a 1.9% fall in the month to October following a 1.1% fall in the month to September 2025. Worryingly, there has also been a 4.7% monthly drop for cash buyers, which further highlights international concerns about the UK and penal rates of SDLT on high valued homes. We are continuing to see a trend where national house prices are catching up with London house prices, with the Northern parts of England growing at an annual rate of over 3% annually.

“The government does recognise that residential development in London has virtually stopped, and will only be reversed if developments become viable again. The government missed an opportunity to influence this in the upcoming budget by increasing taxes on landlords and high value homes and not going far enough in speeding up approvals around building safety.”

Following today’s drop in inflation, which will in turn positively influence the Bank of England’s decision to reduce interest rates tomorrow and thereby encourage further reductions in mortgage rates Thomas Pugh, chief economist at RSM UK said: “Today’s drop in inflation in November to 3.2% was well below both the consensus and analyst expectations and effectively nails on a rate cut tomorrow. It also opens the door to a cut early next year, especially as inflation is set to slow further over the course of 2026.”

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