Understanding the UK Housing Market 2025

The UK housing market 2025 continues to show resilience, with recent data revealing that around 30% of prospective buyers are still actively purchasing property. Despite economic challenges and high interest rates, this sustained activity reflects continued confidence in UK real estate. As buyers adapt to new financial conditions, the market is stabilising and offering strategic opportunities for investors.

Buyer Demand Remains Stable

Buyer activity remains stronger than many predicted. According to Rightmove, the average asking price of newly listed properties in June 2025 rose by 0.8%, suggesting that demand is still healthy. While interest rates have created affordability constraints for some, others are taking advantage of price stability to secure property before future increases.

ONS data supports this trend, noting that while transaction volumes dipped slightly year-on-year, they have levelled out since Q1 2025. Importantly, high demand continues in urban areas such as Manchester and Liverpool, where rental yields remain attractive and economic growth is driving housing needs.

UK House Prices in 2025

Property prices across the UK have grown modestly in 2025. According to Zoopla, average house prices increased by 1.1% year-on-year. This figure reflects the return to a more balanced market following the volatility of the pandemic and the post-lockdown boom.

Price growth is more concentrated in regional cities. The Office for National Statistics shows Manchester and Liverpool leading the way in terms of price increases and buyer activity, underpinned by regeneration schemes, population growth and employer expansion.

Rental Market Strength in Key Cities

Rental prices across the UK continue to rise, driven by limited supply and growing tenant demand. According to Zoopla, average rents have increased by 6.3% over the past 12 months. Cities such as Manchester and Liverpool have experienced even sharper growth, with rental inflation in some postcodes exceeding 7%.

This rental growth is enhancing yields for buy-to-let landlords. With house price inflation slowing and rents rising, gross yields in many northern cities have improved, making 2025 a strategic year for income-focused investors in the UK housing market 2025.

Regional Hotspots: Manchester and Liverpool

Manchester

Manchester continues to be a standout city for property investors in 2025. The city’s economic development, including the £13 billion forecast growth by 2035, has made it a prime location for residential and rental growth. According to JLL, Manchester is projected to see some of the strongest price and rental increases in the UK through to 2027.

Major regeneration projects such as Victoria North and the continued development of MediaCity are contributing to long-term investment appeal. The city’s high student population and tech employment base make it a robust rental market.

Liverpool

Liverpool is also capturing investor attention in the UK housing market 2025. Regeneration schemes such as the Liverpool Waters project and the Knowledge Quarter are transforming the city’s property landscape. Savills ranks Liverpool as one of the top cities for long-term capital appreciation due to its affordability and regeneration pipeline.

Rental demand remains strong, particularly in central areas, where young professionals and students drive year-round occupancy. The city offers some of the highest gross rental yields in the UK, making it an ideal location for yield-seeking investors.

How Investors Are Adapting in 2025

Investors are adjusting their strategies to navigate the UK housing market 2025. With mortgage costs remaining elevated due to the Bank of England’s base rate, many are opting for fixed-rate products to secure predictable outgoings.

Key investor strategies in 2025 include:

  • Focusing on rental yield over capital growth, especially in northern cities
  • Targeting regeneration zones for long-term value uplift
  • Leveraging tax efficiencies such as mortgage interest relief where applicable
  • Buying off-plan to lock in lower prices and benefit from future growth

Buyers are becoming more research-driven, using tools such as ONS, Bank of England, and Rightmove’s Market Trends to track developments and identify strong-performing postcodes.

Future Outlook

The outlook for the UK housing market 2025 is cautiously optimistic. While macroeconomic pressures persist, sustained demand, resilient prices and rising rents create a compelling investment case. Savvy investors are taking advantage of market stability, especially in cities where long-term fundamentals remain strong.

As we move into the second half of 2025, expect further momentum in regeneration-led locations, modest house price growth, and a continued shift in focus from speculative capital gain to income-producing assets.

If you are considering investing in property, please get in touch with us at https://tkpg.co.uk/contact-us/. Our team is ready to help you capitalise on the UK’s exciting property market.

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