2025 UK Property Market Roundup – Q1

As the first quarter of 2025 draws to a close, investors and homebuyers alike are focused on what the future may hold for the state of the UK property market.

Aside from bringing with it several new policy changes, April also represents the start of the new financial year – generally considered the best time to start thinking about future investments.

Here at FleetMilne, we’re committed to providing insights into the latest trends alongside forecasts for the future, ensuring you’re always able to make an informed decision around your investment portfolio.

Supply and Demand Remains a Key Point of Contention

The lack of housing in the UK continues to be a key focus for both the broader property industry and the Government. Aside from being a major part of last year’s Autumn Budget, Chancellor Rachel Reeves reiterated the importance of planning reform in her Spring Statement this week.

In the 12 months leading up to June 2024, around 229,700 new homes were completed, meaning the number of new homes being built has essentially remained static over the last five years. The ONS construction output measure also suggests that residential development sank 15% lower than levels in 2019.

On the other hand, demand has never been higher, especially in major cities up and down the country. As these destinations create new amenities, attract exciting new employers and redevelop key infrastructure, more and more people are looking to live in these key areas.

Data suggests that UK cities have experienced population growth of 7.6% over the last decade, significantly higher than the average growth rate of 6.7%. This growth is expected to continue over the next decade, especially in specific cities such as Birmingham (+354,000), Manchester (+272,000), Bristol (+150,000) and Leeds (+123,000).

Property Prices Growing At Slower Rate

After a period of volatile change amongst economic and political uncertainty, the average UK house price stabilised around £268,000 towards the end of 2024. 

Since then, growth has continued, albeit likely slower than was previously forecasted by major PLCs. At the end of 2024, Savills suggested that the average UK house would rise by 4% over the next 12 months. As of February 2025, the average UK house price is now £268,548, an increase of around 0.23%.  

While there’s still plenty of the year to go, it’s important to note that the OBR has decreased its forecasts for economic growth, which will likely have a knock-on effect on UK property.

Rents Growing But PRS Showing Signs of Pressure

Over the last five years, the UK rental market has become extremely competitive, delivering exceptional returns for investors as renters clamour for quality accommodation. 

According to Rightmove, since 2020, UK rents have increased by 40% – driven largely by both a lack of supply and the ongoing efforts by developers to create exciting new residential projects filled with amenities.

Forecasts from major PLCs paint a similar picture of growth going forward. Savills data suggests UK rents will continue to rise over the next four years – by 4% this year and by 17.6% in total by 2029.

Unfortunately, while a lack of supply can support investors from a competition perspective, it also obviously prohibits the number of tenants able to rent.

This is why the reforms to planning announced in the Budget – and reiterated in the Spring Statement – could support the rental sector. The OBR believe that streamlining these processes could lead to the highest housebuilding levels in over 40 years, potentially delivering 30% more homes by 2029.