March Property Market 2025

Moderate House Price Inflation

The UK property market remains a strong investment opportunity, with the average house price standing at £267,500 as of February 2025. While property prices have seen steady growth, with a 1.8% increase in inflation compared to the previous year, this growth is expected to slow slightly in the coming months. By the end of 2025, house prices are projected to rise by 2.5%, a more moderate increase compared to the rapid recovery seen over the past year.

Though house price inflation is beginning to cool, it is essential to note that prices are still growing at a pace faster than a year ago, when they had fallen by 0.2%. The annual rate of inflation slightly eased to 1.8% in February from 1.9% in January, signalling a shift towards more stable growth. This trend suggests that while the property market remains resilient, investors can expect a more balanced environment.

Supply and Demand: The North vs The South

While house price inflation is beginning to slow, the overall property market remains active, with the number of sales agreed rising by 5% compared to a year ago. Demand from buyers is up by 10%, indicating sustained interest in property. However, this demand is not evenly distributed. In southern England, while buyer interest has increased, it has not kept pace with the growing supply of homes. This supply-demand imbalance has led to slower house price inflation, with rates of 1% or lower across regions like London, the South East, South West, and the East.

However, in northern England, the Midlands, and Scotland, buyer demand has surged by more than 10% compared to last year, while the supply of homes has not kept up with this increase in interest. This regional disparity is driving above-average house price inflation, particularly in areas like the North West and Scotland, where prices have risen by 3% and 2.5%. For investors, this regional variation presents opportunities to capitalise on markets where demand is outpacing supply, ensuring stronger returns in areas with higher inflation rates.

Stamp Duty Affecting First-Time Buyers

Starting in April 2025, a significant shift in the UK’s stamp duty thresholds will impact first-time buyers (FTBs) in London, with 8 in 10 now expected to pay stamp duty, compared to less than half under the current system. This change, coupled with a slowdown in FTB demand across all price bands in the capital, has contributed to a decline in overall buyer demand in London.

In contrast, FTB demand across the rest of England remains strong, where 6 in 10 first-time buyers will still be exempt from paying stamp duty. This has led to noticeable growth in FTB demand outside of London, as many buyers seek better value for money in markets offering more affordable entry points. For investors, this shift presents a clear opportunity to focus on regions where FTB activity is on the rise. Particularly in areas where buyers are being displaced from London, driving demand and potential property value growth in these more affordable markets.

A Strong Rental Market

The UK rental market continues to demonstrate strong growth, with average rents across the country seeing notable increases over the 12 months to March 2025. In England, average rents rose by 8.3%, reaching £1,381, while Wales saw an increase of 8.5%, bringing average rents to £785. In Scotland, rents grew by 5.8%, reaching £998. These upward trends reflect the ongoing demand for rental properties. Driven by factors such as supply constraints and a shift towards renting as a more affordable housing option for many.

Looking ahead, UK rents are expected to continue their upward trajectory, with an anticipated increase of 3-4% throughout 2025. This presents a promising outlook for property investors, as rental yields remain strong. The steady growth in rents, combined with the rising demand, offers a stable and potentially lucrative opportunity for investors looking to capitalise on the long-term potential of the rental sector across the UK.