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    Home»Property»London house prices decline as broader UK market rises 3%
    Property

    London house prices decline as broader UK market rises 3%

    October 22, 20255 Mins Read


    London has emerged as the only English region to see a year‑on‑year decline in property values as average UK house prices continue to climb. According to the Office for National Statistics (ONS), nationwide prices rose by 3% in the 12 months to August, whereas in the capital the cost of a house fell by 0.3%.

    The average UK home was valued at £273,000 in August. Regionally, prices climbed to £296,000 in England (up 2.9%), £211,000 in Wales (2%), and £194,000 in Scotland (4%). Northern Ireland, measured on a quarterly basis, posted the strongest growth, with average house prices rising by 5.5% to £185,000 in the second quarter of 2025.

    The North East recorded the highest regional house price inflation in England, with a 6.6% annual rise to August, though this was down from 6.9% in July. At the other end of the spectrum, London saw prices decline 0.3% year-on-year, reversing a 1.3% increase in July.

    “The North East once again showed the highest annual increase and London is the only English region showing an annual fall,” said Aimee North, head of housing market indices at the ONS.

    Read more: UK inflation holds unexpectedly at 3.8% in September

    Responding to the figures, Propertymark CEO Nathan Emerson mentioned the challenges facing homeowners and buyers.

    “Despite an economy that continues to throw challenges, especially to those on the housing ladder, it is positive to see people witness growth in their equity when looking at property,” he said. “Consumers have battled a very unfavourable combination of high inflation and interest rates over the last few years, and there remain potential uncertainties ahead in many cases.”

    He added that attention would now turn to next month’s autumn budget. “There is widespread speculation that stamp duty across England and Northern Ireland may be scrapped and potentially replaced with an alternative. Depending on what is proposed and implemented, there is potential to create a much smoother-flowing property marketplace.

    “However, it is important that any new system helps remove barriers to purchasing a property for those who aspire to.”

    Alongside cooling house prices, rental inflation across the UK also showed signs of easing. Average private rents rose 5.5% in the 12 months to September to £1,354 per month, a slowdown from the 5.7% increase seen in August, and the ninth consecutive month of easing growth.

    England mirrored the UK-wide trend, with rents up 5.5% year-on-year to £1,410, down from a 5.8% rise in August. Rents in Wales climbed 7.1% to £815, while Scotland saw a more modest 3.4% increase to £1,004. Northern Ireland recorded a 7.1% rise to £865, based on data for the 12 months to July.

    Despite the overall slowdown, regional disparities in rent inflation persist. The North East of England posted the highest annual increase at 9.1%, while Yorkshire and The Humber recorded the lowest at 3.8%. London, with average rents of £2,260, saw inflation ease to 5.3% in the year to September, marking the tenth consecutive month of slowing growth. Since peaking at 11.5% in November 2024, the capital’s rental inflation has dropped by 6.2 percentage points.

    Read more: This free service could help you recover a lost pension worth thousands

    The highest local average rent was recorded in Kensington and Chelsea at £3,629, while Dumfries and Galloway in Scotland posted the lowest at £527. Outside of London, Oxford had the highest average rent, at £1,911.

    Emerson warned that high rents and limited availability were putting significant strain on renters.

    “With the average income needed to rent a home across the UK now reaching £45,420, and £1,514 being the typical rental price, it is clear that there are challenges which need addressing, in terms of simply not having enough supply of rental properties available to meet current demand levels.”

    He also pointed to structural changes underway in the rental market. “We are about to witness some of the biggest evolutions in over 30 years within the rental sector,” he said, citing the Renters’ Rights Bill in England and the Housing (Scotland) Bill.

    “Across the forthcoming decade, it is essential that all eyes are turned to encouraging long-term investment in the rental sector to keep up with increased demand and population growth.”

    Richard Donnell, executive director of Research at Zoopla, said : “House price inflation is slowing, but strong demand from first time buyers is keeping this measure of price inflation higher than other measures. Budget uncertainty is leading to a slowdown in sales and demand which will drive a continued slowdown in house price inflation.

    “The increase in first time buyers activity is one reason rental inflation has slowed to the lowest level in almost three years, alongside a 20% increase in the number of homes for rent and growing affordability pressures on renters.”

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