A Deep Dive into the Data, the Discrepancies, and the Direction Ahead

What’s Going On with UK House Prices?

Introduction: A Muddled Market

Trying to make sense of the UK housing market in 2025 feels, to many, like trying to read a compass in a thunderstorm. Every new headline appears to contradict the last, leaving homeowners, first-time buyers, investors, and policy makers all scratching their heads. Rightmove reports a modest 0.6 per cent rise in house prices in May, while Nationwide boasts a more robust annual growth of 3.5 per cent. The official UK House Price Index (HPI), meanwhile, puts annual house price inflation at a staggering 6.4 per cent.

So what’s actually going on with UK house prices?

The answer is far from straightforward. It involves a stew of conflicting data sources, regional variation, post-pandemic demand hangovers, inflation, interest rate jitters, and evolving buyer behaviour. In this article, we’ll delve into the roots of these discrepancies, evaluate the reliability of the different metrics, and attempt to chart a course through the chaos.

The Landscape of UK House Price Data

To understand the inconsistencies in reported house prices, we first need to unpack how the various indices compile their data.

1. Rightmove House Price Index
   Rightmove bases its figures on asking prices of properties listed on its website. This offers a timely snapshot of seller sentiment, but it doesn’t reflect actual sale prices. It’s also subject to regional skew, as not all homes in all parts of the UK are marketed through Rightmove.
2. Nationwide House Price Index
   Nationwide’s index is based on mortgage lending for purchases, not remortgages or cash buys. As a result, it reflects a specific segment of the market—largely owner-occupiers taking out new mortgages. It uses a repeat-sales methodology, which tracks price changes of the same properties over time.
3. UK House Price Index (HPI)
   The official HPI, compiled by HM Land Registry, offers the most comprehensive view, incorporating all property sales in England, Wales, Scotland and Northern Ireland, including cash transactions. However, it lags behind the market by several weeks or even months due to the time it takes for transactions to be registered.

Each index tells a part of the story, but none tells the whole truth. The disparities are not errors—they’re reflections of different methodologies, samples, and timelines.

Recent Market Performance: The Numbers

Let’s take a closer look at the latest data from each of the main sources:

• Rightmove (May 2025): Monthly increase of 0.6 per cent, annual increase of 1.2 per cent. Reflects asking prices.
• Nationwide (May 2025): Annual house price growth at 3.5 per cent. Based on mortgage lending.
• UK HPI (Latest release covering March 2025): Monthly increase of 1.1 per cent, annual growth at 6.4 per cent. Reflects completed sales.

What’s immediately apparent is that the further back in time the data goes, the more buoyant the price growth appears. This suggests a cooling trend as we head deeper into 2025, but also reflects the time lag in reporting.

Why Are Prices Still Rising?

For all the doom-laden headlines in late 2022 and 2023 about a looming market crash, UK house prices have remained surprisingly resilient. Several factors have contributed to this unexpected robustness:

1. Chronic Undersupply
   There simply aren’t enough homes being built to meet demand, particularly in areas with strong job markets and good transport links. The lack of supply continues to prop up prices, especially in sought-after regions.
2. High Employment Levels
   Despite wider economic headwinds, unemployment has remained low. This has helped keep mortgage defaults in check and sustained household purchasing power.
3. Demographic Shifts
   Millennials entering their peak homebuying years have created structural demand. In tandem, older homeowners with equity are helping younger relatives onto the ladder, bypassing traditional market barriers.
4. Foreign Investment
   Continued foreign interest in UK property—especially in London and other major cities—has buoyed the top end of the market.
5. Tight Rental Market
   Spiralling rents have pushed many tenants to consider buying, especially where mortgage payments may be equivalent or even cheaper than rent.

But There’s Trouble Beneath the Surface

Despite these supportive factors, there are unmistakable signs of fragility:

• Interest Rates: The Bank of England’s base rate remains high, hovering around 4.5–5 per cent, making mortgages significantly more expensive than in the ultra-low rate era.
• Affordability Pressures: Wage growth has not kept pace with inflation and house price growth over the last decade, leaving many buyers stretched.
• Mortgage Market Contraction: Lenders have become more cautious, tightening credit conditions and reducing high loan-to-value offerings.
• Increased Supply in Some Areas: New developments and conversions, particularly in the Midlands and North, are slowly balancing supply in select local markets.

The Regional Picture: A Market of Many Parts

It’s a mistake to talk about the UK housing market as a single, homogeneous entity. Regional divergence is now a defining feature:

• London: Price growth has stabilised after years of stagnation and even mild decline. Outer boroughs and commuter towns are performing better than central zones.
• South East & East: Modest growth, driven by family buyers relocating for better value.
• North West & Yorkshire: Stronger annual growth in cities like Manchester and Leeds, underpinned by regeneration and infrastructure investment.
• Scotland & Wales: Volatile but largely positive. Local policy differences (e.g. land transaction tax) impact affordability.
• Northern Ireland: Rebounding, but still below pre-2008 peak.

What Do Buyers and Sellers Think?

Buyer sentiment has shifted over the past year. The race for space has slowed, and there’s growing caution, especially among first-time buyers.

Anecdotally, estate agents report longer selling times, more price renegotiations post-survey, and a “wait-and-see” attitude from many would-be movers.

Sellers, meanwhile, are increasingly willing to compromise. Many who set ambitious asking prices in early 2024 have had to reduce expectations.

What Happens Next?

Forecasting house prices is notoriously difficult, but the consensus is for subdued growth—or stagnation—over the next 12 months. Here’s why:

1. Interest Rates to Remain Elevated: The Bank of England is unlikely to cut rates aggressively due to lingering inflationary pressure.
2. Economic Uncertainty: The economy remains fragile. Although a recession has been avoided, growth is anaemic, and any external shock could unsettle the market.
3. Regulatory Changes: Potential tax reforms, EPC requirements for landlords, and planning system changes could disrupt market dynamics.
4. Political Risk: An impending general election could bring housing policy to the fore, potentially stalling decision-making among buyers and developers alike.

However, the lack of forced sellers (thanks to low unemployment and longer fixed-rate mortgage deals) means a sharp correction is unlikely. Instead, we may see a ‘soft landing’—a period of low or no price growth while affordability recalibrates.

Advice for Buyers and Sellers

• Buyers: If you’re planning to stay in a property for five years or more, modest short-term fluctuations shouldn’t deter you. Focus on affordability and long-term value.
• Sellers: Be realistic. The market isn’t falling apart, but overpricing will lead to stagnation. Well-priced homes are still selling.
• Investors: Yields remain attractive in certain regional cities, but do your homework. Regulatory headwinds in the rental sector require careful navigation.

Conclusion: A Market in Flux

The UK housing market in 2025 is a complex, contradictory beast. Prices are technically rising—but only just, and not everywhere. Different data sources show different pictures because they are capturing different slices of the market at different times.

What’s clear is that we’re in a period of transition. The post-pandemic boom is over. The era of easy money has passed. What lies ahead is a more grounded, arguably healthier market—less frothy, more cautious, but ultimately more sustainable.

For now, the house price picture might still look like mud—but beneath the surface, the sediment is slowly settling. And as clarity returns, a more balanced market may finally emerge.