UK house prices rise, but challenges remain for first time buyers
According to today’s UK House Price Index from HM Land Registry, UK average house prices rose 3.9% in the year to May 2025, with a monthly increase of 1.1% from April 2025. The average price of property in the UK in May 2025 was valued at £269,000.
The latest regional data continued to show significant regional variations in prices across the UK, with the North East leading the way with the highest annual growth of 6.3%. In contrast, South West house prices only increased in the year to May by 1.9%. The London market saw annual growth of 2.2%, down 1.4% from April 2025.
Stacy Eden, Head of Real Estate at RSM UK, comments: “The latest data shows that UK house prices have increased at a similar rate to inflation in the year to May 2025. While it is positive that house prices rebounded in May on a national level, the London market remains subdued, and highlights concerns around affordability and the attractiveness of London to domestic and global investors.
“According to RICS, sales activity in May was soft, with house prices remaining largely flat at the headline level. However, monthly mortgage approvals rose by 2,400 to 63,000 for the first time since December 2024. The overall picture reinforces the affordability challenges for individuals looking to get on the ladder, with house prices only up 3% nationally since 2023, whereas rental prices increased 6.7% in the 12 months to June. The surge in rental prices highlights how difficult it is for first time buyers to save for a deposit.
He added: “The upward trend in house prices is likely to remain steady throughout 2025 but is unlikely to decline given the shortage of residential properties in the UK, the ongoing supply and demand imbalance, and expected interest rate cuts. There is reason for cautious optimism following yesterday’s Mansion House reforms, as increasing access to high loan-to-value mortgages will help to alleviate affordability challenges for first-time buyers. We’re also seeing some local authorities exploring schemes to replace Help to Buy, which would bring more liquidity to the private residential market.”