Rental growth slows but supply pressures persist
Average UK house prices rose by 4.6% in the year to December 2024, reaching £268,000, according to latest government data.
This marks an increase from the 3.9% annual growth recorded in November 2024. The Office for National Statistics noted that house price inflation has generally trended upward since hitting a low of -2.7% in December 2023.
In England, the average property price stood at £291,000 in December 2024, reflecting a 4.3% (£12,000) rise compared to the previous year. This growth exceeded the 3.4% annual rise noted in November. Wales reported an average house price of £208,000, an increase of 3.0% (£6,000) over the year. However, this represented a slowdown from the 3.7% rise recorded in the 12 months to November.
Scotland experienced stronger growth, with average prices reaching £189,000 — up 6.9% (£12,000) year over year. This was an improvement from the 5.9% annual increase seen in November. Northern Ireland posted the highest growth among the UK nations. Average house prices there reached £183,000 in the fourth quarter of 2024, up 9.0% (£15,000) compared to the same period in 2023.
The ONS Private Rent and House Price data also showed that among English regions, the North East recorded the strongest annual price growth at 6.7% in December, edging up from 6.4% in November. London continued to lag behind other regions, with zero annual growth in December — down from 0.5% in the previous month.
Average UK house prices increased by 4.6%, to £268,000 in the year to Dec 2024, this annual growth was up from 3.9% in the 12 months to Nov2024.
— Office for National Statistics (ONS) (@ONS) February 19, 2025
Average UK private rents increased by 8.7% in the year to Jan 2025, this is down from 9.0% in Dec2024.
➡️ https://t.co/AGSBU7JXaG pic.twitter.com/KQ7RANjOPL
“January was a strong month for sales, with activity levels rising across key metrics. Buyer demand has continued to grow, with viewing enquiries up 11%,” said Jean Jameson (pictured left), chief sales officer at Foxtons. “With further base rate cuts expected and positive sentiment holding firm, 2025 is set to be a year of opportunity for buyers and sellers alike.”
Ross Turrell (pictured centre), commercial director at CHL Mortgages, echoed this optimism.
“Today’s data adds to a growing list of reasons for optimism about the UK property sector,” Turrell said. “With annual growth holding strong at 4.6% and the Bank of England’s recent rate cut fuelling demand, there is a real sense that market activity is ramping up. As a result, buyers and investors are showing renewed confidence, and market momentum is building.
“However, while the outlook is positive, there is no room for complacency. The surge in transactions ahead of changes to Stamp Duty thresholds is a reminder that challenges remain, including regulatory pressures that could add complexity to investors’ plans in the months ahead. Lenders must therefore continue to take a pragmatic and flexible approach.
“While demand is high, brokers and borrowers still require support, particularly as rates remain elevated. Ensuring borrowers can access the right solutions will be key to maintaining momentum and supporting their long-term goals.”
Rental market growth eases but remains elevated
Private rental prices across the UK rose by 8.7% in the 12 months to January 2025, easing from 9% in December. The latest figure remains below the peak annual growth of 9.2% recorded in March 2024.
In England, average rents rose to £1,375, marking an 8.8% increase. Wales saw average rents climb by 8.4% to £780, while rents in Scotland reached £995, up 6.2%. Northern Ireland posted an 8.3% rise in the 12 months to November 2024. London remained the region with the highest rental inflation in England, with prices up 11% annually. In contrast, Yorkshire and The Humber recorded the smallest increase at 5.3%.
“The rental market remains under significant pressure, with demand continuing to outstrip supply,” said Alex Upton (pictured right), managing director of specialist mortgages and bridging at Hampshire Trust Bank. “Letting agents are managing multiple applicants for every available property, and while stock levels have seen some movement, competition remains fierce. Until supply and demand move closer to balance, rental prices will keep climbing.
“But addressing this isn’t just about building more homes. The greater opportunity right now is in making better use of existing housing stock. Investors are focusing on refurbishment and conversion — revitalising underused properties and bringing them back into the rental market. This isn’t just a short-term fix; it’s an essential part of increasing supply in a meaningful way.
“For this to happen at scale, lenders must step up. Investors need financial support that enables them to move quickly, alongside planning frameworks that support these projects rather than slow them down. Without that, pressure on tenants and landlords alike will only intensify.”
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