Housing Market set for a Hot Summer
- Base rate cut to 4.25%, and I predict no movement in June.
- The number of sales agreed in May is the highest for 4 years.
- Properties Are Selling for 4.5% Under Asking Price.
- 113 prospective buyers per estate agent branch, up from 81.
- The average price of property in England and Wales rose to a record £289,817, a 6.6% increase year over year.
- Mortgage lenders relax affordability tests.
The housing market came to life in May after April was flat with a late Easter, the stamp change, and the markets waiting for the most guaranteed base rate change in recent history. Zoopla confirms this, reporting that the number of sales agreed in May is the highest for 4 years and up 6% on last year.
I think we will see similar growth throughout the summer. We're not just seeing greater demand from buyers with more affordable mortgages and the relaxing of affordability stress testing, but there is more supply; something that has been lacking in recent years. Zoopla has stated that in May, 13% more sellers listed their homes than last year. On average, estate agents in England and Wales have 35 unsold properties available for buyers.
Properties Are Selling for 4.5% Under Asking Price
In April, Rightmove reported that the average price of a home coming to market rose 1.4 per cent to a record £377,182. Unsurprisingly, in May, the typical home sold for 4.5% less than the asking price, which fell on average to £367,000. To maintain sales growth, estate agents and sellers need to be realistic when setting their sale prices, as a buoyant market means there'll be a lot of haggling if there is a large supply of properties to choose from.
There are more homes coming to market, giving buyers more choice, and sellers need to remain realistic on price. More homes for sale means more buyers looking to move. This, coupled with more attractive mortgage deals and changes to how lenders assess affordability, is supporting an increase in the number of sales being agreed.
We expect sales to keep rising over the second half of the year, with UK home values on track to be 2% higher by the end of 2025.
Source: Richard Donnell, Executive Director of Zoopla
Prospective buyer registrations saw a jump
Although the data being released is from March, Propertymark's statistics are useful to show the increase in buyer interest. In March 2025, the average number of new prospective buyers registered per estate agent branch increased to 113, representing a rise from 81 in the previous month. This highlights the pent-up demand we saw through April, which secured offers in May and will continue through the summer.
A lift on the planning restrictions for heat pumps
In our April Housing Market Report we wrote about whether we will achieve the heat pump target set by the Government. The Tories planned to grow the heat pump market to 600,000 installations annually by 2028.
To support achieving this target the Government have removed a key planning restriction: heat pumps must be one metre from a neighbour's property. They hope that this will accelerate the uptake of the low-carbon technology. Read more: Should I Buy a House With a Heat Pump?
Will mortgage rates go down in June 2025?
As we predicted in last month's Housing Market Report, the Bank of England's (BOE) Monetary Policy Committee (MPC) reduced the base rate to 4.25%. There was however a three-way split among members of the MPC with the majority voting to reduce to 4.25%, but others voting to either leave rates unchanged or cut them to 4%.
Andrew Bailey, the BOE Governor, feels the US trade deal was welcoming, giving the UK an improved outlook; however, growth isn't just from the US. The UK has a "very open economy"; the forecast could change negatively if other trading partner countries are burdened with US tariffs.
Trade deals aren't the only concern, as UK inflation rose to a 15-month high of 3.5% in April. The Office for National Statistics states that higher household bills drive it. Chief Economist at the BOE, Huw Pill, feels that the MPC cut interest rates too quickly last year and feels there is a risk to price growth. We'll see inflation fall in June and in July as energy costs fall. This is evidenced by Ofgem, which states that energy bills will fall by 7% in July, the first drop in a year.
Will the Bank of England pour fuel onto the fire by dropping the base rate on the 19th June? In my opinion, there is no chance of a rate change because of the volatility of the markets and inflation at the moment. Andrew Bailey stated this month that the path for rates was "downwards” but said future rate cuts were likely to be "gradual and careful". I think it is more likely a drop to 4% in the 7th August MPC meeting after my predicted fall in inflation following the energy price drop.
The upcoming MPC announcements on Bank Rates are on the 19th June, 7th August, 18th September, 6th November, and 18th December.
Transaction numbers down whilst prices hold firm
England & Wales
The latest data reveals a continuing trend of reduced market activity in England and Wales. In January 2025, the number of completed property transactions stood at 42,721, a 19.4% decrease compared to last year.
Despite this slowdown in transactions, average house prices in England and Wales have shown resilience. By March 2025, the average price had risen to £289,817, a 6.6% increase year-on-year. This suggests that while fewer people are moving, the value of properties remains supported, likely by a combination of limited available stock and ongoing, albeit potentially more selective, buyer demand.
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.
The steady upward trajectory of average prices, as seen with the 6.6% annual increase in March 2025, suggests that property values remain firm for those able to transact.
Mortgage approval reports
Home buyers
NOTE: April 2025 mortgage data will be available from 2nd June 2025.
The latest data up to March 2025 reveals a continued positive trend in mortgage approvals for homebuyers. In March 2025, there were 64,309 approvals. This represents a 5.4% increase compared to March 2024 (60,962 approvals) and a more significant 25.8% increase compared to the low point in March 2023 (51,105 approvals). This sustained growth suggests ongoing buyer confidence despite wider economic fluctuations.
Mortgage lenders relax affordability tests
Mortgage lenders stress test you during a mortgage application to confirm if you can afford to repay your mortgage if interest rates increase. The normal stress test has been 8 to 9% interest rates; however, as the base rate is coming down, and likely to come down more, mortgage lenders can have more confidence to reduce their stress testing to 6.5%
For example, a First-time buyer with a 20% deposit and a 30-year mortgage would pay £1,021 monthly on a 4.5% interest rate. Stress-tested to 8.5%, this goes up to £1,548, but tested to the reduced 6.5%, it comes down to £1,274. More First-time buyers will likely pass the relaxed stress test, and thus, more buyers are in the market.
There is a similar pattern for homeowners who can also benefit from the relaxed stress test, allowing the potential for stepping up the housing ladder.
Remortgages
The remortgage market shows a slightly different picture. In March 2025, there were 33,387 remortgages. This is a 13.3% increase compared to March 2024 (29,410 remortgages).
This increase suggests that more homeowners are moving to secure new mortgage deals, potentially responding to the recent base rate adjustments and anticipating future movements.
Over 60s hold nearly £3 trillion in property wealth
Savills' data shows that over-60s in the UK hold over nine times more housing wealth than those under 35. Owner-occupiers aged 60-plus now hold a record estimated £2.89 trillion of all owner-occupier housing wealth across England and Wales, equating to 56% of all housing wealth. This compares to under-35s holding just 6% of owner-occupied housing wealth.
On a regional basis, older homeowners tend to make up relatively high concentrations of homeowners overall in the South West and Wales and relatively low ones in London. Lucian Cook, head of residential research at Savills, said: “The baby boomers have continued to build wealth, having paid off their mortgage debt, and Generation X has been working hard to achieve the same goal. Meanwhile, Generations Y and Z have had much less opportunity to work their way up the housing ladder profitably.”
How many new-build properties are being built?
The latest data for Q4 2024 (Ministry of Housing, Communities and Local Government) presents a mixed picture for new build activity. While new build starts have seen a significant surge, increasing by 51.5% year-on-year, the number of completions has declined by 8.8% over the same period.
Ministers have acknowledged that housebuilding will have to double within the next two years to hit Labour’s target of 1.5 million homes; that's 374,000 new homes a year from 2027. Sir Sadiq Khan is considering plans to build on some of London's green belt to resolve the capital's housing crisis. This has been responded to by Matthew Pennycook, MP, Housing Minister, who insisted there was no need to go further in overriding environmental protections or allowing developers to build without planning permission.
The government are on track to hit the target and said its plans would involve a transformation of the existing system, including plans to give local authorities more powers to compulsorily purchase land and clearer rules on infrastructure.
Source: Matthew Pennycook MP, Housing Minister
Andrew Boast FMAAT
CEO of SAM Conveyancing
The housing market came to life in May, and this isn't a flash in the pan. We're set for a buoyant summer with more homes for sale and more Affordable Mortgages.
There is no chance of a base rate change this month as the Bank of England take a slow and steady approach. I think it is more likely a drop to 4% in the 7th August MPC meeting after my predicted fall in inflation following the energy price drop.
As for the pledge on delivering 374,000, we'll be lucky to hit 150,000 to 200,000 a year in 2025-26. Scaling to those targets quickly will never happen.
I expect to see plenty of first-time buyers enjoying this summer in their new home!
Sources: Latest data from - Gov.UK, Bank of England, UK House Price Index, ONS and Propertymark (NAEA).
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