UK house prices entered 2025 in a period of cautious recovery after two years of correction. Following the sharp rises of 2020–2022 and the subsequent cooling driven by rising mortgage rates, the market has found a new equilibrium. Here's what the data actually shows — and what it means for buyers and sellers over the next 12–18 months.
Where prices stand now
According to HM Land Registry data, the average UK house price at the end of 2024 was £285,000, down approximately 3.8% from the peak of £296,000 reached in mid-2022 but up 1.2% year on year. The market correction was shallower than many economists predicted — primarily because supply also contracted, limiting downward pressure on prices.
Regional variation is significant. London values remain flat year on year, while the North West, Yorkshire and East Midlands have seen stronger growth of 3–5% as affordability-driven migration from more expensive regions continues.
The average UK property now takes 65 days to sell from first listing to offer acceptance — down from a peak of 82 days in late 2023 but still longer than the 44-day average at the 2021 market peak.
The mortgage rate effect
Mortgage rate levels remain the single biggest driver of UK house price movements. The Bank of England's rate-hiking cycle has ended and cuts are underway, but the transmission into mortgage products is gradual. Two-year fixed rates have fallen from their 2023 peak of 6.5%+ to around 4.0–4.5% in early 2025 — still well above the sub-2% rates available in 2020–21.
As rates continue to fall, buyer affordability improves incrementally. Each 0.5% fall in the effective mortgage rate adds approximately 5–7% to the amount a typical buyer can borrow — meaning more buyers can access more expensive properties without stretching their affordability ratios.
Supply constraints
New housing supply in England remains well below the government target of 300,000 new homes per year. Completions in 2024 came in at approximately 220,000. The shortfall between household formation and housing supply provides a structural floor under prices — particularly in high-demand regions.
Simultaneously, the number of existing properties coming to market has been suppressed by the "mortgage prisoner" effect: sellers with very low fixed rates from 2020–21 are reluctant to move and take on a new mortgage at current rates. This locks in supply scarcity at the existing-homes end of the market.
What the forecasters say for 2025–2026
| Forecaster | 2025 forecast | 2026 forecast |
|---|---|---|
| Nationwide | +2% to +4% | +3% to +5% |
| Halifax | +1% to +3% | +2% to +4% |
| Savills | +3.5% | +4.0% |
| Knight Frank | +3.0% | +5.0% |
The consensus points to modest growth — somewhere in the 2–4% range nationally for 2025, accelerating modestly into 2026 as mortgage rates fall further. None of the major forecasters are predicting a return to the double-digit annual growth of 2021–22.
What this means for you
For sellers: The market is stable and improving. You're not facing the headwinds of 2023. Price realistically — the overpriced-and-sits-on-market dynamic is still very much in play — and the buyers are there. Listings on Cavendish Knight that are priced within 5% of the local market median are selling in an average of 38 days.
For buyers: Prices are not falling meaningfully. Waiting for a significant correction is a gamble that most forecasters consider unlikely. If you find the right property at a price that works for you on current or near-term mortgage rates, the risk of waiting is likely to outweigh the reward.
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