Real Estate Agents Report Increase in Property Prices for First Time in Two Years (According to RICS)
The UK housing market in 2025 is experiencing a steady, yet subdued growth, with house prices modestly rising by around 2-4% annually. According to the latest data from the Office for National Statistics (ONS), the average UK house price stands at £269,000 as of June 2025, a 3.7% year-on-year increase.
The RICS survey, a sentiment survey rather than an actual house price index, indicates a net balance of +11% of respondents saying house prices were rising in September. This figure increases to +45% over the next 12 months, suggesting a positive outlook for the housing market.
However, the higher mortgage borrowing costs are causing a constraint on affordability and dampening buyer demand. Mortgage rates have remained significantly higher than the pandemic years, with typical rates around 4.5% for those with 25% deposits, compared to ~1.5% in 2021.
The RICS survey also reveals a net balance of -29% of respondents reporting an increase in landlord instructions, indicating a decrease in the number of properties being put up for sale by landlords. This could potentially lead to a decrease in housing supply, exacerbating the affordability pressures for tenants.
Rental costs continue to climb moderately alongside house prices, with the Office for National Statistics indicating rising private rents alongside house price increases. This trend is expected to continue, potentially worsening the affordability issues for tenants.
Key factors influencing these trends include higher mortgage interest rates, increased housing supply, stamp duty changes causing transaction volatility, and broader economic conditions. The cautiously improving economic outlook with earnings growth outpacing house price increases is expected to improve affordability over time.
The government's introduction of new legislation to improve renters' rights, such as the Renter's Rights Bill, is a welcome move for tenants. However, some landlords believe these changes will erode their profits further, potentially leading to a decrease in housing supply if responsible landlords are discouraged from remaining in the market.
Despite these challenges, the latest survey results indicate a brighter picture for housing market activity. Tarrant Parsons, head of market analytics at RICS, stated that the survey results indicate a brighter picture for housing market activity. Greater protection for tenants, as proposed by the Renter's Rights Bill, must ensure they do not discourage responsible landlords from remaining in the market, as stated by RICS president, Tina Paillet.
The sales market sentiment has turned positive over the past two months, with a net balance of +5% of respondents saying sales were up in September. A net balance of +23% of respondents believe the sales market will continue to grow over the next three months. This positive sentiment could indicate a recovery in the UK housing market in the coming months.
References: 1. Rightmove (2025). Rightmove House Price Index. [Online] Available at: https://www.rightmove.co.uk/house-prices/trends/ 2. Nationwide (2025). House Price Index. [Online] Available at: https://www.nationwide.co.uk/house-price-index/ 3. ONS (2025). UK House Price Index. [Online] Available at: https://www.ons.gov.uk/economy/inflationandpriceindices/housepriceindex/bulletins/ukhpi/latest 4. RICS (2025). RICS Residential Market Survey. [Online] Available at: https://www.rics.org/uk/knowledge-and-insight/market-information/rics-surveys/rics-residential-market-survey/ 5. RICS (2025). RICS UK Housing Market Forecast. [Online] Available at: https://www.rics.org/uk/knowledge-and-insight/market-information/rics-housing-market-forecast/
- The increasing interest rates in finance are causing a constraint on affordability in the housing market, as mortgage rates have risen significantly higher than the pandemic years, making it more difficult for potential buyers.
- The RICS survey suggests a positive outlook for the UK housing market, with a net balance of +45% of respondents expecting house prices to rise over the next 12 months, indicative of increased investing in real-estate.
- The Renter's Rights Bill, aimed at providing greater protection for tenants, could potentially lead to a decrease in housing supply if responsible landlords are deterred from the market, impacting the property market negatively.
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