UK Property Market Forecast 2025: Cautious Optimism Amid Labour Market Pressures
At Curzon Land, we provide a grounded and insightful perspective on the evolving UK property market forecast for 2025 – combining economic indicators, regional trends and buyer behaviour to help you make confident, informed decisions.
House Prices Decline Despite Falling Mortgage Rates
According to the latest data from Nationwide’s House Price Index, UK house prices fell by -0.8% in June 2025,the most significant monthly drop since the aftermath of the 2022 mini-budget. Since January, property values are down-0.6%, although they remain 2.1% higher year-on-year.
However, Prime Central London saw values decline by -2.9% year-on-year, according to recent data from Savills Prime London Index. This segment continues to experience softness due to high-value transaction costs and cautious demand from international buyers.
This overall decline comes despite signs of improving affordability. Lenders have begun offering sub-4% mortgage deals, anticipating further cuts to the Bank of England base rate. Oxford Economics projects the rate may fall to 3.75% by the end of 2025, down from its current 4.25%.
Despite these improved conditions, market sentiment remains fragile, largely due to mounting concerns within the labour market.
Weak Labour Market Dampens Housing Confidence
A significant drag on the UK housing market recovery in 2025 is the rising unemployment rate. Data from the Office for National Statistics (ONS) shows that unemployment increased to 4.6% in April — the highest figure in nearly four years. In the same month, the number of people on UK payrolls fell by 55,000.
This softness in employment is largely attributed to increased National Insurance (NI) contributions and a higher National Minimum Wage, both of which came into effect in April. These rising costs have led many employers to reduce staffing levels, undermining household confidence and, subsequently, demand in the housing market.
Regional Trends: Resilience in the North, Weakness in the South
Regional disparities continue to characterise the UK property market forecast for 2025. According to Nationwide, only Scotland (+0.8%) and the North East (+0.4%) recorded quarterly house price growth in Q2. Meanwhile, the West Midlands (-1.7%) and East Anglia (-1.3%)were among the weakest performers.
More granular data from the Land Registry (March 2025) reveals that:
- North Lanarkshire experienced the strongest annual growth at +9.8%
- Newcastle upon Tyne saw +8.7%
- Clackmannanshire recorded +8.4%
- Prime Central London: -2.9%
On the other end of the spectrum, annual price declines were most significant in:
- Aberdeen (-3.9%)
- Torridge (-3.8%)
- Kensington and Chelsea (-3.3%)
These patterns reinforce the importance of localised analysis. Prices across London’s prime central districts continue to reflect their greatest value in over a decade, down -22.4% on their 2014 peak (Savills). At Curzon Land, we work closely with investors and developers to identify high-performing areas outside traditional hotspots.
Supply & Demand Imbalance Forces Price Pragmatism
The latest RICS Residential Market Survey (June 2025) , to which Curzon Land is a contributor, shows a growing imbalance between supply and demand. Surveyors are reporting a decline in new buyer enquiries,while the number of new instructions to sell is rising — a combination that has pressured sellers to become more price-flexible.
Forward-looking indicators also suggest continued softness in transaction activity. According to TwentyCI, the number of sales agreed in June 2025 was 5% below pre-pandemic averages (2017–2019) — the lowest figure recorded in the past 12 months.
Meanwhile, Bank of England data confirms that while mortgage approvals rose modestly in May, they remained 5% below long-term averages, suggesting subdued demand despite more attractive borrowing conditions.
SDLT Threshold Changes and Market Adjustment
The recent lowering of Stamp Duty Land Tax (SDLT) thresholds earlier this year had a noticeable impact on transaction volumes. Data from HM Revenue & Customs (HMRC) shows that property completions in May 2025 were still 16% below the 2017–2019 average— although this was a significant improvement from April’s 35% shortfall.
Historically, it takes 2–3 months for the market to recalibrate following major tax changes. Next month’s data will provide further clarity on whether the market is stabilising in line with past trends.
Curzon Land Outlook: A Measured Recovery for the Remainder of 2025
Looking ahead, Curzon Land expects the UK property market in 2025to follow a measured path to recovery. While falling interest rates and stable inflation create the macroeconomic backdrop for growth,ongoing labour market instability and weakened buyer sentiment will likely restrain a rapid rebound.
We forecast:
- Continued resilience in northern and Scottish regions
- Greater buyer opportunity in softer southern markets
- A possible uplift in transactions by Q4 2025 if employment stabilises
- More realistic pricing strategies from motivated sellers
- London to remain bifurcated, with outer boroughs and commuter areas offering stronger value than Prime Central locations
Whether you’re an investor, homeowner, or developer, navigating today’s market requires agility, insight, and a firm grasp of the macro and micro drivers affecting property performance.
Let Curzon Land Guide You
At Curzon Land, we deliver strategic property investment solutions underpinned by robust market analysis and deep regional expertise. If you’re seeking clarity on your investment strategy or considering your next move, our team is here to support your goals.
Explore more at curzonland.com or contact us directly to book a consultation.
