It's a Buyer's Market for the first time in years
- Borrowing costs unchanged, as the base rate held at 4.25%, and I predict a change to 4% in August or September.
- Average house prices have increased by 74% over 20 years.
- 22% of homes listed for sale have been on the market for over six months.
- Approvals up, with the highest number of remortgages in a single month since October 2022.
- Good news for first-time buyers, the self-employed, and those borrowing into retirement; FCA announces review into its mortgage rules.
It has been many years since I could say this, but we're now in a "Buyers Market" and we're seeing the impact of this. Buyers hold the upper hand when there are more mortgage options and a greater number of properties on the market.
Rightmove reported sellers have cut listing prices, with the average new-sale price falling by 0.3 per cent in June. The decline is unusual for the time of year, as demand typically pushes prices higher during the summer. I think this year, the volume of sellers in the market is the cause for this, plus having 12 months of YOY average house price growth would mean an adjustment to buyers' mortgage affordability.
Something echoed through Halifax as they reported that UK house prices fell by 0.4 per cent in May, with annual growth slowing to 2.5 per cent. Despite the monthly price drop, property values have increased by more than £7,000 over the past year.
...these small monthly movements point to a housing market that has remained largely stable, with average prices down by just 0.2 per cent since the start of the year. The market appears to have absorbed the temporary surge in activity over spring, which was driven by the changes to stamp duty.
Source: Amanda Bryden, head of mortgages at Halifax Plc
House prices increased by 74% in 20 years
A slight fall in house prices in June isn't a disaster, or the sign of a housing crash; it's just that house prices have been increasing for decades. According to Zoopla, house prices in the UK have increased 74% over the last 20 years, adding over £150,000 to the average house price (from £113,900 to £268,200).
London has seen the most significant house price increases, with average prices going from £244,200 to £534,400. However, the historic growth in London has proven itself to be unsustainable, with price growth in the Greater London region slowing significantly in the last ten years, to fall behind every other region in the country, as we reported in February.
During this time, we've seen three recessions, one caused by the Financial Crash in 2007 and the other two linked to COVID in 2020 and 2023. The housing market has shown resilience to grow over the years, so it will continue to do so through this new buyer's market.
It's not all sunshine for sellers
Property website Zoopla has said that 22% of homes listed for sale have been on the market for over six months and remain unsold. The online property website states that the normal range from listing the property to finding a buyer is five to 14 weeks.
Even in a buyer's market, there will be old housing stock that isn't selling. I think it is highly likely that selling agents have been slow to adjust their selling prices to align with the market. If house prices aren't increasing, and properties are selling for 4.5% under asking price, as Rightmove reported last month, then agents need to set a more realistic asking price.
It's been a while since the buyers have had the upper hand, so it may take agents a month or two to adjust their sellers' expectations downward.
Regional Spotlight: South West & Glastonbury
In April 2025, the average house price in the region stood at £300,633, a modest 0.9% increase year-on-year, and sales volumes in February 2025 saw a 10.1% dip compared to the previous year. House prices in the county of Somerset, home to this month's famous Glastonbury Festival, stand just below the average for the region, so it seems house prices are not driven up by the well-loved event.
Will mortgage rates go down in July 2025?
As we predicted in last month's Housing Market Report, the Bank of England's (BOE) Monetary Policy Committee (MPC) maintained the base rate at 4.25% in their June meeting. The MPC voted 6-3 to keep the base rate at 4.25%, and its next scheduled meeting is not until August 7, 2025.
The decision to hold, despite May's Consumer Price Index (CPI) inflation falling slightly to 3.4% (from 3.5% in April) and core inflation also decreasing, reflects the MPC's cautious and "gradual and careful approach" to monetary policy.
While disinflationary progress has continued, particularly with services inflation slowing to 4.7% and private sector pay growth moderating, the Committee remains vigilant about inflationary pressures. For example, the unexpected rise in food prices in May signals the "two-sided risks to inflation" that the Bank is monitoring closely.
Andrew Bailey, the Governor of the Bank of England, offered some positive news as he reported to the Treasury Select Committee that the Bank of England may abandon its cautious approach to rate cuts if inflation risks falling below two per cent.
I think, though, that a base rate cut is on the horizon, and that the BOE aren't going to wait for the 2% inflation target. This is because inflation won't hit those levels due to energy and food costs increasing. In my opinion, this means the base rate will be cut, even though we're not in the 2% sweet spot, and I predict a base rate cut to 4% in the August or September MPC.
The upcoming MPC announcements on Bank Rates are on the 7th August, 18th September, 6th November, and 18th December.
Sales inch up whilst prices tell a different story
England & Wales
In April 2025, the average property price in England & Wales stood at £281,278; a solid 3.1% year-on-year increase compared to April 2024 (£272,735).
The average price for first-time buyers was £234,980, reflecting strong entry-level demand. Meanwhile, owner-occupiers purchased at an average of £343,394, and cash buyers at £267,579, often leveraging strong negotiating power in a market where speed and certainty are highly valued by sellers.
New build properties, at an average of £443,872 in February 2025, continue to command a premium.
On the transactional front, sales volumes show a downturn. In February 2025, England & Wales recorded 42,790 completed transactions. This represents a notable 14.0% decrease from the 49,724 sales observed in February 2024, indicating a cooling in market activity compared to the previous year.
Owner-occupiers continue to dominate activity, accounting for 42,470 of these sales, while cash buyers made up 5,172 transactions. The data clearly indicates that while prices are holding firm, the overall number of completed sales has pulled back, reflecting a more cautious market environment.
The contrast between the lower number of transactions and the continued price growth highlights a market grappling with affordability for buyers. It seems, however, that sellers are being lured to the market in the hope of selling at these ever-increasing prices.
Mortgage approval reports
Home buyers
In May 2025, House Purchase Mortgage Approvals stood at 63,032. This marks an increase from the 60,656 approvals recorded in April 2025 and the 61,034 approvals in May 2024.
This follows a period of stronger activity seen in late 2024, which peaked around October 2024 at 68,285 approvals, and a cooling off in buyer momentum as we moved into Q2 2025.
Market commentators suggest that the anticipated removal of Stamp Duty thresholds at the end of March 2025 may have pulled forward some transactions into the first quarter, leading to a natural lull in April, but we've seen a strong start to the late-Spring and Summer months.
Additionally, affordability constraints, the Bank of England maintaining the base rate at 4.25% (as of June 2025), and broader economic uncertainties, including world conflicts, are likely contributing to a more cautious approach from buyers.
FCA announces review into its mortgage rules
The UK’s mortgage watchdog has initiated a public conversation reviewing the future of the mortgage market, to see how it can make it easier for first-time buyers, the self-employed, and those borrowing into retirement. This comes a month after we reported that Mortgage lenders relaxed affordability tests to make mortgages more affordable.
The FCA's review looks into how a mortgage applicant's affordability is assessed in the age of short-term and zero-hour contracts. I think the approach should be to assess the payment history of an applicant's rent, as it is proof of how the mortgage could be paid over a period of time. One thing is for sure: a fresh approach is needed to assess mortgage applicants who are not paid through conventional contracts.
High loan-to-value mortgage lending increases
The share of high loan-to-value mortgage lending increased to its highest level since 2008 in the first three months of 2025. Mortgages worth more than 90 per cent of the value of a property made up 6.7 per cent of all mortgages in the UK in the first quarter of the year, up from 6.3 per cent in the previous three months.
This data from the Bank of England shows the growing number of mortgage products available to those first-time buyers with a lower than 10% deposit. I don't see this as growing confidence; I think it is more that mortgage lenders can lend to higher-risk individuals, with the Government's mortgage guarantee schemes.
Separately, UK Finance data on mortgage borrowing by the over 55s showed there were 38,510 new loans advanced to these borrowers in the first quarter of this year, a 33.5 per cent annual rise. The value of this lending was £6.1 billion (Independent).
Remortgages
Remortgage Approvals reached 41,521 in May 2025. Not only is this the first month since October 2022 that approvals reached over 40,000, but it is also a healthy increase from 35,282 in March 2025 and 29,159 in May 2024. This trend underlines a drive by homeowners to secure new deals amidst their existing fixed-rate mortgages expiring or to avoid reverting to potentially higher Standard Variable Rates (SVRs).
Lenders have been increasingly competitive in this space, offering a range of products as a large volume of fixed-rate deals taken out during lower-rate periods continue to mature. This suggests that while new buyer confidence may be wavering slightly, existing homeowners are actively engaging with the market to optimise their mortgage arrangements.
Beware the "Freemen on the land" fake scam
"Freemen on the land" is the name given to people who make misleading and harmful claims that mortgage holders can't be held liable for their mortgages (and other taxes and debt), using arguments dating back to Magna Carta. The objective is to prey on struggling homeowners who then pay the scammers to find out how to avoid paying their mortgage.
After being tricked into stopping their mortgage payments, these mortgage holders pay the scammers for help to take their claims to court, to stop their homes from being repossessed. But none of these claims have succeeded as they’re not legally valid.
Victims of this scam have lost their homes and large portions of their equity.
If you are approached by someone suggesting this scheme, you should speak to your mortgage lender immediately and continue to pay your mortgage as normal.
The FCA have updated their website to state: "If you're struggling to pay your mortgage, you're more at risk of being targeted by firms or individuals who won't be acting in your best interests, or by criminals who may encourage you to commit fraud". Read more FCA: Struggling with your mortgage? Avoid risky offers.
How many new-build properties are being built?
In Q1 2025, total starts for new homes reached 29,610. This marks a notable increase of 15.5% compared to Q4 2024 (25,640) and a substantial 22.8% rise year-on-year from Q1 2024 (24,110), suggesting renewed confidence among housebuilders, rebounding from lows experienced in late 2023.
Conversely, total completions in Q1 2025 registered 32,560 units. This represents a 20.3% decrease from Q4 2024 (40,860) and a 5.2% decline year-on-year from Q1 2024 (34,360). This adjustment in completions reflects the inherent time lag from earlier periods of lower starts, as well as ongoing challenges in delivery.
Labour is expected to fall short of its 1.5 million homes target, with projections estimating 840,000 homes will be delivered over five years
Source: Savills
Andrew Boast FMAAT
CEO of SAM Conveyancing
A Buyers' Market is just what we need to see; regular "fresh" housing stock coming to market, with active buyers putting in competitive offers. If this slows the growth of house prices, then I see it as a well-needed leveller for the rest of 2025.
Mortgage activity shows homeowners are finally getting the rates they need to remortgage. We'll see more and more coming to market to secure their next fixed-term rate. The question is, will it be for 2 or 5 years?
This is a different type of housing market, with different challenges and opportunities, for sellers and buyers. How the BOE handle the next base rate change will be interesting. My money is on a change to 4% in August or September.
Sources: Latest data from - Gov.UK, Bank of England, UK House Price Index, ONS and Propertymark (NAEA).
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