UK House Prices See Rapid Growth: Insights from recent Survey
Tuesday 17 June, 2025
In January 2025, UK house prices experienced the most significant annual growth in two years, as reported by Nationwide. The building society revealed that the price of an average home increased by 4.1% compared to the same time last year, bringing property values close to their historic peak. This robust growth comes despite the ongoing challenge of affordability, which remains tight by historical benchmarks.
Key Trends Driving the Housing Market
The market’s recent strength has been attributed to several factors. Between December and January, house prices rose by 0.1%, marking the fifth consecutive month of growth. The current average property price stands at £268,213, just shy of the record high of £273,751 achieved in August 2022.
Nationwide noted that the housing sector has demonstrated remarkable resilience, with mortgage approvals in recent months nearing levels seen before the pandemic. Data from the Bank of England confirmed that mortgage approvals have reached their highest point since August 2022, indicating sustained buyer activity.
According to Robert Gardner, Nationwide’s Chief Economist, low unemployment levels and wage growth outpacing inflation have played a crucial role in supporting the housing market.
Changes to Stamp Duty
The housing market has also seen recent increased activity in February and March as buyers raced to take advantage of stamp duty rules before they changed on 1 April 2025. As announced in the Autumn Budget 2024, the thresholds for Stamp Duty Land Tax (SDLT) in England and Northern Ireland reverted to previous levels. From April, house buyers began paying stamp duty on properties over £125,000, instead of the current £250,000 threshold.
First-time buyers, who did benefit from no stamp duty on purchases up to £425,000, now see this relief drop to £300,000. Nationwide anticipated the surge in transactions in the first quarter of 2025 as buyers aimed to meet the deadline.
While some analysts have linked the recent rise in house prices to this stamp duty deadline, Mr. Gardner suggests the impact has been minimal so far, as most mortgage applications may have begun before the Budget announcement.
Mortgage Rates and Affordability Challenges
Millions of mortgage holders face higher repayments in the coming years as their fixed-rate deals end. The Bank of England estimates that approximately 4.4 million households will see their repayments increase by 2027, with a typical owner-occupier potentially facing an average rise of £146 per month.
To cope with affordability pressures, many buyers are opting for extended mortgage terms, which reduce monthly payments but result in higher overall borrowing costs. This trend raises concerns about the impact on long-term financial planning, particularly as more homeowners carry mortgage debt into retirement.
Guidance for First-Time Buyers in the Current Market
For first-time buyers navigating today’s housing market, preparation is key to making informed and confident decisions. You should begin by assessing your current financial situation, including the savings you have for a deposit and your credit score.
It will also help to research the current property prices and consider how the changes to stamp duty thresholds may impact your budget, especially if you plan to buy a property priced between £300,000 and £425,000.
With mortgage rates still relatively high, it’s essential to compare deals across lenders and to assess your eligibility for mortgage products. It can also help to explore government schemes that might offer support, such as shared ownership or Help to Buy (Available only in Wales).
Engaging with one of our professional financial advisers early in the process can help you understand your options, estimate your borrowing power, and identify the most cost-effective and suitable mortgage products.
Taking these proactive steps can position you to enter the market with greater financial confidence and long-term stability.
The Importance of Professional Mortgage Advice
Navigating the complexities of the current housing market, particularly against the backdrop of shifting mortgage rates and evolving stamp duty rules, underscores the importance of expert guidance. Seeking advice from one of our qualified financial and mortgage advisers at Thomas Oliver can be invaluable.
Burcu Kaya, Mortgage & Protection Adviser in Enfield Town, North London said:
“With our understanding of market trends and lending products, our team of professional financial advisers help our clients identify the most suitable mortgage options, optimise their affordability, and plan for long-term financial health. Our expertise helps to ensure that our customers make informed decisions, balancing immediate housing needs with broader financial goals.”
As the housing market evolves, having a trusted mortgage adviser by your side can make all the difference, helping you secure the right deal and confidently navigate one of life’s most significant investments.
Sources: theguardian.com, gov.uk, What are the current UK mortgage rates? | Property news
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