UK House Price Index: UK house prices rise, but London market faces property tax headwinds
According to today’s UK House Price Index from HM Land Registry, UK average house prices rose 3.7% in the year to June 2025, with a monthly increase of 1.4% from May 2025. The average price of property in the UK in June 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 7.8%. In contrast, South West house prices only increased in the year to June by 1.5%, with the London market seeing markedly lower annual growth of 0.8%.
Peter Graham, partner and tax lead for real estate and construction at RSM UK, comments: “In the year to June 2025, UK house prices have increased at a similar rate to inflation. While it is encouraging to see that house prices increased nationally, particularly in the North East which saw strong annual growth, the latest data does suggest a more challenging picture for the London and South West markets. Aside from ongoing affordability and overseas investment concerns, this week’s announcement that the Treasury is potentially introducing a new tax on the sale of homes, namely a capital gains tax on the sale of homes over £1.5m, which have an adverse impact on homeowners in London and the South West, where house prices are stagnating.
“Despite the government’s aims to address the £40bn black hole in public finances, the Chancellor runs the risk of squeezing lower earners and young professionals out of the London market. Given the average property price is well above the £500,000 threshold, coupled with surging rental costs, the added layer of a new property tax could contribute to London becoming an ageing city, and create another cliff edge in the tax system which could lead to a reduction in the number of property transactions, as sellers delay moving or downsizing to avoid being hit by the tax.”
He added: “With interest rate cuts now likely delayed, national house prices are expected to maintain a steady rather than stellar upward trend throughout 2025. However, the proposed capital gains tax on homes over £1.5m risks compounding affordability pressures, especially in the London and South West markets. To avoid further disparity in regional house price growth, it’s essential that the government broadens its support beyond high loan-to-value mortgage schemes, with a more holistic approach ensuring more sustainable and inclusive growth across the UK housing market.”