Rising residential rents in the private sector and increasing house prices – albeit slowly – suggest a healthy enough property market. But a drop in the number of young home owners, together with a lack of confidence in the construction industry are taking their toll.
Rental increase for landlords
In 2025, UK private sector rents rose by 5.7% over the 12 months to August, reaching an average of £1,348/month.
During the same period, London saw rent inflation of 5.7% as well, while other regions recorded higher growth: Wales +7.8%, Northern Ireland +7.2%, Scotland +3.5%. House prices across the UK increased by about 2.8%, with England up ~2.7%.
Fewer young people buying their own home
According to the Office for National Statistics (ONS), UK rents are expected to keep rising in the coming years as housing affordability remains a major challenge. The proportion of 22- to 29-year-olds who own a home has continued to decline, now standing at around 25% in 2025, compared to 37% in 2008 and 27% in 2017.
The drop is largely attributed to high property prices and the growing difficulty of saving for deposits, especially in major urban areas like London, where house prices and rent costs continue to outpace wage growth.
House prices fall in UK
According to Halifax’s latest 2025 report, the average UK house price now stands at £289,900, marking a 0.8% monthly decline but remaining 3.1% higher than a year ago.
Analysts note that the national average masks significant regional differences. While London and the South East have seen slight price drops amid affordability pressures, many regions in the North West, Midlands, and Wales continue to experience steady growth, reflecting stronger local demand and more affordable housing markets.
Fears also hitting construction market
A recent IHS Markit survey (October 2025) shows that UK construction activity eased slightly, with the Purchasing Managers’ Index (PMI) dipping to 52.1 from 52.9 the previous month. Confidence among purchasing managers also hit its second-lowest level in five years, reflecting ongoing economic uncertainty.
However, there are bright spots — the industry recorded its fastest employment growth since 2015, driven by a rise in trainees and apprentices, while new orders remain strong, suggesting underlying resilience in the sector.
For the latest updates and takes on what’s happening in the UK property market, check out our Sourced blog on a regular basis.
Author
Chris Kirkwood
