Rental growth slows but remains high
Residential property prices rose by 4.9% in the year to January 2025, according to new government figures, with the average home now costing £269,000. The annual growth rate edged up from 4.6% in December 2024.
England recorded an average house price of £291,000 in January, up 4.8% year-on-year — an increase of £13,000. This was a slightly stronger annual rise than the 4.4% seen the previous month.
Wales saw the highest annual growth across the nations, with prices rising by 6% to £210,000. The jump followed a volatile 12-month period that included a 2.1% monthly drop in January 2024 and a 0.9% monthly increase in January 2025, which contributed to the sharp annual change.
In Scotland, the average property price reached £187,000, up 4.6% annually, though that was down from 5.9% in December. Northern Ireland posted a 9.0% year-on-year rise in average prices to £183,000 for the fourth quarter of 2024.
Average UK house prices increased by 4.9%, to £269,000 in the year to Jan 2025, this annual growth was up from 4.6% in the 12 months to Dec 2024.
— Office for National Statistics (ONS) (@ONS) March 26, 2025
Average UK private rents increased by 8.1% in the year to Feb 2025, this is down from 8.7% in Jan 2025.
➡️ https://t.co/d3LDqryP8M pic.twitter.com/BEs9agO03m
“The year started strong, driven by the looming Stamp Duty deadline and a post-Christmas reassessment of lifestyle priorities,” said Nick Leeming (pictured), chairman of Jackson-Stops, commenting on the latest ONS Private Rent and House Price data. “This is reflected in our data, with 59% of branches reporting increased buyer interest in the past month.”
“While Stamp Duty incentives are ending, the fundamental issue remains — a nationwide shortage of homes. Labour is committed to increasing supply, but until those homes materialise, price growth is likely to continue.
He added that the refinancing of 1.8 million fixed rate mortgages this year may lead more households to re-enter the market.
“As the Spring bounce approaches, we expect house prices to hold steady through the first half of the year,” Leeming said.
According to Kevin Roberts (pictured centre), managing director at L&G Mortgage Services, the first quarter of 2025 has been strong for the property market, with healthy competition between lenders and the return of sub-4% mortgage rates driving borrower confidence.
“As we move past the artificial stimulus of the upcoming Stamp Duty changes, the market outlook is positive for homebuyers,” he said. “The best port of call for any borrower is to consult a professional mortgage adviser.”
Rents still rising, but pace slows
In the rental sector, average UK private rents rose 8.1% to £1,326 in the 12 months to February 2025. This marked a slowdown from the 8.7% annual rise recorded in January.
Across the regions, England’s average monthly rent reached £1,381, up 8.3%. Wales saw an 8.5% rise to £785, while Scotland’s average rent increased 5.8% to £998. Northern Ireland reported an 8.1% increase to £832 in the year to December 2024.
London saw the highest annual rent inflation in England, at 9.9%, while Yorkshire and The Humber recorded the lowest, at 4.8%.
“Rising rents have become a reality for tenants, driven by a fundamental shortage of rental homes,” said Alex Upton, managing director of specialist mortgages and bridging at Hampshire Trust Bank, said.
“However, there are signs of change. Zoopla’s latest rental market report shows the number of renters competing for each available property has dropped to 12. It’s still high, but an improvement on recent years.”
Upton said this softening in demand may be helping to slow rent increases, but warned of risks ahead.
“The elephant in the room is the Renters’ Rights Bill,” she said. “While the legislation is designed to improve standards, which we fully support, there are concerns that it may reduce rental stock, at least in the short term.”
She added that landlords are adjusting their strategies, and brokers and lenders will need to follow suit. “If they do, the real winners will be tenants, benefiting from a broader selection of high-quality rental homes in the future.”
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