This week Rachel Reeves went on a spending spree and announced a housing bank that developers will be able to withdraw from. Rents rose, albeit at a slower pace, as sales along with prices dipped. First time buyers kept moving while investors moved on. Borrowing more for longer became a necessity and the Renters’ Rights Bill was benched for yet another week. Welcome to another UK Property News Recap – 13.06.2025.
AI to aid councils planning departments
Coming to a council near you: ‘Extract’, the digital AI tool developed with Google that can scan documents in minutes, speeding up and freeing up planning departments who can’t find the staff.
Bellway remains upbeat
The latest trading update from developer Bellway was upbeat about the year ahead with output set to rise to 8,700 homes. Despite their optimism it comes with a caveat that continued stability is needed to maintain the current spring trajectory. As it stands, their operating margin nudged up from 10 to 11%. Changes to the group’s product mix resulted in average selling prices tiptoeing from £307,909 to £315,000. All being well, output is also set to rise to 8,700 new homes.
Homes England banks on Reeves
This week, Rachel Reeves deftly performed some sleight of hand to conjure up more “affordable” funds by re-designating Homes England as a ‘public financial institution’. This means it will be able to act as a bank, dispersing low-interest loans for housing and infrastructure projects in a bid to attract investment from house associations. It also means the chancellor won’t have broken her fiscal rules and appeased Angela Rayner and the many developers who’ve been asking, bowl in hand, for more.
At the same time £25bn is anticipated to be drip fed to social housing over the course of 10 years.
A market divided
According to estate agency Hamptons; activity picked up in May but investor and second homebuyers retreated from the market after tax increases put pay to profiteering and escapism.
First time buyers are continuing to drive sales and prices in more affordable regions reducing the number of properties sold for a discount of below 5%. In contrast those selling properties above a million are pulling away from the market as discounts increase due to buyers’ inability to reach agreement, and the timeline to agreeing a sale dragging on. “Nearly one in three (32%) sales agreed over £1m were sold for more than 5% less than their final asking price in May”
Prime Central London discounts
Gravity had its way with inflated prime prices that were previously backed by foreign investment that has now or is trying to flee the country for sunnier, more tax-efficient climes. As a result, prices fell -2.1% in May, agreed sales reduced 7% and enquiries plummeted 13% on last year. Outer prime fared better; prices rose 1.1% annually off the back of domestic buyers whose kids are established in secondary school or have fixed work commitments in the country.
As a byproduct of Prime Central London price drops, domestic buyers are stepping up to bag a discount once reality has sunk in.
Labour to fall short of 1.5m new home target
Developers blame: cladding bill, planning time, lack of cheap labour and materials, affordable home funding and more importantly buyers who can afford to move.
Government promises: more planning officers (long way off) and the creation of a National planning policy framework to speed up approvals. To scrape environmental impact assessments in favour of a tax. They have created the Temporary Shortage List to include construction works. They’ve implemented changes to the hope value attributed to land and encouraged the FCA to allow lenders to broaden lending criteria to enable more buyers on to the ladder.
To follow: some reincarnation of the Help to Buy/Build scheme to enable their economic growth plan, which was heavily focused on development, to be realised
Fewer landlords own just one property
The heavily indebted pension pot property landlord who made hay while rates were low and prices rising has by now either offloaded or had to renew, due to a lack of interest at the price asked, hoping for more favourable rate winds in the future.
Those with a property portfolio nestled within a limited company have cut away at the dead wood, or at least attempted to, by selling properties with issues, those which require work, or aren’t bringing in a good enough return.
Those that remain, aren’t heavily, if at all, indebted, are looking to buy new EPC ready stock or cheaper properties in commuter towns that will yield generous returns.
As a result, the landlord movement is well-advanced and what and who is left should be fully realised come 2027.
Ibstock loses stock
The foundations and building blocks of the new homes revolution stumble as inflation takes hold and demand wanes. As a result; Ibstock, the UK’s “leading manufacturer” of bricks and concrete products, now expects full year 2025 adjusted EBITDA to be in the range of £77 million to £82 million (2024: £79 million). In response the group’s shares fell 13.7%.
First time buyers bust the most moves
In this month’s Mortgage and Lenders and administrators statistics for Q1 2025, it became apparent that first time buyers had led the ‘move’ment charge’ with owner occupiers tagging along. While investors and those looking to remortgage pulled back.
For those needing to borrow with a deposit of 10% or less, the recent broadening of lending terms appeared to have aided lending numbers by 0.4pp from the previous quarter to 6.7%.
Owner occupation numbers increased by 2.6pp from the previous quarter to 66.3%. While remortgages for owner occupation decreased by 2.2pp from the previous quarter to 21.3%.
Meanwhile those borrowers already financially drained gave way, increasing new possession cases by 12.3% while new cases slowed by 1.7pp from the previous quarter to 10.2%. .
As a result the total stock of possessions increased by 7.2% from the previous quarter to 7,822, the highest since 2014 Q3, 29.7% higher than a year earlier
House price dip in May 2025
Transaction numbers nosedived in May but prices only dipped on average by 0.1% according to Acadata’s latest HPI for May, which covers transactions in England and Wales. London had a good month, prices edged up causing less of a drag on the overall price index but remained 5% lower year-on-year. To compensate; the Midlands and the North of England found some of the wind taken out of their sails – prices dropping into negative territory.
Rachel Reeves’ affordable housing spending spree
Rachel Reeves “grants” local authorities, private developers and housing associations their new home wishes over the next 10 years with £39bn. At the same time social landlords are given the green light to increase rents by 1% above inflation making Angela Rayner’s dreams come true. However a deeper dive into the pledged £39bn showed that only £3bn would be allocated a year over the next three years (currently £2.5bn) before “reaching” £4bn by 2029-30 and then rising with inflation. Top ups from unspent money from a previous year could roll over boosting funds but on the whole, larger “affordable” loans won’t be withdrawn till election time
Rental growth slows
Affordability limits rental growth to 2.8% annually, making the average UK rent £1,287, £35 more than in April last year, according to Zoopla. The areas still pushing boundaries remain on the fringes of towns but close to cities, Wigan and Carlisle reported a 8.8% rise while other more established areas such as Leeds (-1.5%) and WC London (-0.6%) are finding they are having to pull back from recent increases as tenants struggle to reach.
Despite demand falling 16% in the past year as a result of some first time buyers moving on to the ladder and others looking to work and study elsewhere, demand remains 60% above pre-pandemic levels while supply remains 20% below. This is enabling rental prices to remain elevated.
RICS UK Residential Survey for May 2025
In RICS’s latest residential survey it emerged that the intention to move is there, but prices remain a sticking point. Valuations rose along with stock numbers, which crept up in May 2025 while demand tentatively moved forward. This maintained the level of agreed sales across the UK, at a discount. In the near future the consensus is for the market to continue, as is, trudging on, waiting for rate change or stability to set in before rebooting later in the year. This is leaving a window of opportunity for those able to move beforehand.
In the rental market, the lack of supply versus demand means tenants’ will continue to feel the squeeze both now and in the future.
UK house price reflections
Low rates fueled a boom in property prices spanning two decades. This increased the average house price, by 74% from £113,900 to £268,200 according to Zoopla. London and the South East saw the biggest increase; prices rising 115% and 87% respectively. In the capital, the borough, Kensington and Chelsea saw the biggest increase, up 124% and Elmbridge in the South East,110%.
Zoopla also found nostalgia drew 52% of buyers to consider a move back to their roots. If this is in the North East of England, where prices rose the least, 39%, they may find this move more affordable. However, in the future with investment pivoting northward they could also see more pronounced growth.
UK residential housing transactions tank in May along with real estate activity
The post stamp duty holiday lull manifested in a 63.5% monthly decrease in UK residential transactions in April 2025. The knock on effect: legal activities output decreased by 10.2% and real estate activities on a fee or contract basis, fell by 6.5% in April 2025.
Construction gets a pick me up in April 2025
Six out of the nine construction sectors saw increases in April 2025 building on the estimated output level overall by 0.9% in April 2025. The main contributors came from infrastructure new work and private housing repair and maintenance, which grew by 2.0% and 1.5%, respectively.
Rates hold steady
There was no real change to average UK mortgage rates this week which currently average 5.14%. The market looks to be holding a steady resting rate as it continues on its long road to recovery. Any economic shocks though could easily have it spiking again or even reducing to get buyers up and moving again.
Living longer means working and borrowing longer to keep up
UK Finance found 38,510 new loans were advanced to older borrowers in the first quarter of this year, marking a 33.5% annual rise
The value of this lending was £6.1 billion – a jump of more than two-fifths (42.6%) compared with the same quarter a year previously. There were 5,620 new lifetime mortgages advanced in the first quarter of this year, up 11.1% year-on-year. The value of this lending was £530 million, which was up 39.5% compared with the same quarter a year previously. The cost of living, eating away at savings and security.
And that concludes another UK Property News Recap – 13.05.2025. Any comments please do get in touch.
