Property values in close proximity see another increase, marking the fifth consecutive monthly rise.
UK House Prices Continue to Rise, Albeit Unevenly
The UK property market is experiencing a moderate increase in house prices, with the average UK house price reaching an estimated £269,000 in June 2025, according to Tom Brown, managing director of real estate at Ingenious. This represents an annual growth of approximately 3.7%.
However, regional variations are significant. The North East of England leads the growth, with prices rising by 7.8% annually, followed by Scotland and Northern Ireland with annual increases of 5.9% and 5.5%, respectively. England as a whole saw a 3.3% annual rise, while Wales recorded a 2.6% increase, and London, the most expensive market, experienced the slowest growth at 0.8% annually.
The ongoing shortage of housing supply relative to demand continues to underpin price increases, despite cost-of-living pressures and mortgage affordability challenges. Tom Brown emphasises the importance of understanding the underlying subsectors and regional dynamics when considering the broad view of the UK property market.
One factor contributing to the current trend in house prices is the improvement in mortgage rates. Since 2022, higher mortgage rates initially slowed growth due to affordability pressures. However, in 2025, the Bank of England has lowered the base rate, and lenders have responded with more competitive mortgage deals, making borrowing cheaper than last year. This has encouraged buyers back into the market, supporting ongoing price growth.
The more affordable mortgage rates have helped revive demand, particularly in regions with better value properties, attracting buyers moving away from expensive areas like London. Kim Kinnaird, director of Halifax Mortgages, stated that the findings suggest a relatively stable start to 2024.
Government policies such as changes in stamp duty (property transaction taxes) earlier in 2025 temporarily accelerated transactions and price changes, but the effect has normalized since then. Beyond this, no new major government interventions specifically altering the market in 2025 were highlighted in the latest data.
As part of this year's Spring Budget, Chancellor Jeremy Hunt announced a cut in the higher rate of capital gains tax on residential properties from 28% to 24% from April 2024. This move is expected to encourage landlords and second homeowners to sell their properties, making more housing options available for buyers.
Despite high inflation and higher borrowing rates, the UK property sector remains resilient and popular, as per Tom Brown. The institutional housing sector, with its long-term investment horizon, rental growth, and substantial capital inflows, has experienced fewer disruptions compared to the residential sector.
However, the situation in the UK property market is not uniform throughout the country and across all price ranges. In Eastern England and the South East, house prices fell by 0.8% and 0.6%, respectively, in January 2024. London, while still the most expensive market, saw a slight increase of 1.5% in its average house price from the previous year.
In conclusion, UK house prices are rising moderately but unevenly across regions, influenced strongly by improving mortgage rates and persistent supply shortages, while government measures have had limited direct impact in the current period.
The ongoing improvement in mortgage rates has enabled more buyers to enter the market, leading to a rise in house prices, especially in regions offering better value.
Understanding the underlying subsectors, regional dynamics, and the impact of factors like mortgage rates and government policies are crucial in analyzing the evolving UK property market landscape.
