This week, developers took a leaf out of Trump’s book and attempted to negotiate with the government for increased leniency and financial support for buyers to ensure Labour hit their self-imposed housing target. Meanwhile the UK property market was reported to have slumped, post holiday, but with further rate cuts on the horizon, lenders and developers are hoping this will prove to be a good pick me up. Welcome to another UK Property Recap – 09.05.2025.
Developers’ requests grow, threatening Labours housing target to fail otherwise
To start the week, the Home Builders Federation claimed the 40% target set by the government for all new homes to be fitted with solar panels wasn’t achievable by 2027, instead they are proposing 20%. They argued many roofs will be north facing or uneven and so gaining prior approval will slow development further. The government has already said there will be “flexibility for legitimate cases” so though there may be some lag, this possibly could be more about the additional outlay cost affecting their bottom line than anything else.
Shortly after it was reported the pace of housing dropped by 9% when compared with last year. This was largely due to buyer affordability constraints and increased build costs, reducing the volume of new homes built. Due to this, housebuilders asked for help to buy to be reinstated to support Labour’s ambitious housing target.
As a sweetener to developers; the government is reserving planning committees for bigger schemes (unless railroaded further by the government into submission) leaving smaller projects to be left in the hands of “expert” planning officers. This move is expected to speed up planning and boost economic growth but development opposition won’t go quietly.
April brings a downpour of doubt to the UK Property market
The fall out, post stamp duty holiday and Trump tariff threats, had the UK property market withdraw from activity in April. Many waited and watched to see how prices would react and for rate cuts to fall enough for monthly repayments to be manageable.
As a result, demand diminished, agreed sales plummeted and prices slipped, the North and Scotland being the exception. This trend, according to those surveyed by RICS, is believed to continue in the short term before building momentum throughout the year with each rate cut.
Meanwhile in the rental market, supply continued to make itself scarce while demand edged up across the UK. (Scotland being the exception, demand decreasing – potentially due to the sales market continuing to tick over.) As a result, rents are expected to rise, further depleting tenants’ take home pay.
Expected UK base rate cut puts downward pressure on rates
Jumping the gun, Nationwide announced further rate cuts ahead of the Bank of England MPC meeting, offering sub 4% mortgages to include first time buyers with a 40% deposit for the first time.
Two days later the Bank of England announced another base rate cut of 0.25% to 4.25%. The impact of Trump’s tariffs have caused the MPC to take an electric hedge trimmer to rates where once secateurs were preferred. This will boost housing market activity in the coming months and bring relief to those facing remortgaging, tracking the base rate and new borrowers.
That said, inflation is due to increase to 3.5% by the end of the year before stabilising at 2% in 2026. Rates could therefore easily go either way depending on how the economy responds.
Halifax HPI shows house prices rising
In Halifax’s latest HPI, house prices were recorded to have risen in April by 0.3% to £297,781. This meant the annual rate of growth on THEIR index, edged up to 3.2% but prices were down over the past three months.
The North/South price growth divide was also shown to be continuing with the North recording record annual growth, up 8% while the South West tiptoed up, 0.9%.
The cost of Asylum housing triples to £15bn
Seeking asylum proves costly for the tax payer as costs are revealed to have spiraled. Contracts handed in 2019 to three private contractors, Clearsprings Ready Homes, Mears Group & Serco Group, were originally estimated by the Home Office to cost £4.5bn over 10 years. The National Audit Office now estimates the cost to be £15.3bn through to 2029.
Sadiq Khan plans to build on London’s Green Belt
Sadiq Khan announced green belt land near transport links would be up for development, in order to provide hundreds of thousands of new affordable homes in London. Depending on where these homes land expect some of the opposition to be anything but green.
Rightmove continues to dominate the portal turf war
The online property portal Rightmoves’ latest trading update, which was released on Friday, was unchanged since their 2024 full-year results, with 8-10% revenue growth expected in 2025.
Membership continues to increase, leaving them to anticipate 1% growth across Estate Agency and New Homes in 2025 and an underlying Operating Profit margin of 70%.
A financial leg up is enabling first time buyers to spend more sooner
The latest insight from UK Finance showed that assisted buyers are on average purchasing higher-priced properties, thanks to larger deposits facilitated by family support. This advantage means, on average, those aged just over 30, with an average household income of £56,000 are, unsurprisingly, on the ladder ahead of those without support. First time buyers, “doing it for themselves” are having to wait till they are over 32 and have a higher household income of £65,000.
Deposit amounts vary considerably across the UK but for London buyers without support they are typically putting down £150,000 while those receiving family assistance, are on average, “depositing” £225,000.
Eat, sleep, repeat…the cycle of lending begins anew.
The Bank of England has announced plans to scrap rules restricting risk-taking at building societies that it imposed after the collapse of former mutually-owned lenders Northern Rock and Bradford & Bingley in the financial crisis. They now appear to be confident that the member-owned lenders are in a more solid position, 17 years after they were hit by the worst crash in their 250-year history.
Knight Frank UK House Price Forecasts are revisited
Estate Agency, Knight Frank revised their estimates for UK price growth up from 2.5% to 3.5% this year due to the improving rate landscape. Their figures have also risen slightly “over the following three years, taking the cumulative five-year total to 22.8% from 19.3%.” However, prime central London expectations were cut due to increased taxes and political and economic uncertainty eating away at the wealthy’s once healthy funds.
As for rents the Renters Rights Bill and limited stock has been held responsible for the revised increase – cumulative growth now up to 18.8% from 17.6% in November and 17.1% in London, up from 15.3% six months ago.
And that concludes another UK Property Recap – 09.05.2025. If you have any comments or suggestions please get in touch.
