Is Now a Good Time to Buy a House in the UK? [2025 Update]

Have you been wondering if 2025 is the best time to buy a house? With home prices experiencing an increase of over 18% nationwide in 2020 and 2021, you may worry you missed the boat.

However, the UK housing market in 2025 presents a unique opportunity for homebuyers and investors. After a period of rapid price increases during the pandemic, followed by a cooling in 2023–2024, the market is stabilizing. Mortgage rates, though higher than historical lows, are expected to remain steady, and regional price variations offer options for a wide range of buyers.

However, this post will answer the question ‘is now a good time to buy a house in the UK’ by examining the factors driving the red-hot housing market and whether opportunities still exist for savvy investors who time their property purchase correctly.

Short Summary

• The UK house prices are expected to stabilize in 2025, with certain regions forecasted for growth. 
• Interest rates remain around 5.2%–5.5% for fixed mortgages, with potential decreases if inflation trends downwards.
• Affordable opportunities exist in the North West and Midlands, while London and the South East remain strong markets for long-term investment.
• Recent updates to Stamp Duty Land Tax (SDLT) provide benefits, particularly for first-time buyers, potentially lowering the cost of purchasing a home.

Is Now a Good Time to Buy a House? (5 Factors to Consider)

Buying a house is a significant financial decision that requires careful consideration of several factors. As a prospective homebuyer in the UK, you must evaluate if you are in a stable financial position to afford the ongoing costs of homeownership, such as rental income expenses

Consider the following factors to make an informed decision:

1. Financing options
2. Your financial situation
3. Ongoing costs
4. Interest rates
5. House prices

1. Financing Options

There are several options for financing a home purchase in 2025. Fixed-rate and adjustable-rate mortgages remain the most common choices:

• Fixed-Rate Mortgages: These offer stability, with interest rates and monthly payments that remain consistent over the life of the loan. Current fixed-rate mortgage rates hover around 5.2%–5.5%, reflecting the stabilization of the Bank of England’s base rate at 5.25%. 
• Adjustable-Rate Mortgages (ARMs): These often start with lower interest rates but carry the risk of future increases if market rates rise. ARMs may be suitable for short-term buyers who plan to refinance or sell before the initial low rate adjusts.

Actionable Advice: Evaluate your financial situation and risk tolerance when choosing between these options. Work with a mortgage lender to determine which products you qualify for based on your credit score, deposit size, and income. A larger deposit (20% or more) can help secure lower interest rates.

2. Your Financial Situation

Before committing to a home purchase, assess your overall financial health:

• Income Stability: Ensure you have a consistent income source that can support mortgage repayments.
• Savings for a Deposit: A 10%–20% deposit is standard, though higher deposits often yield better mortgage terms.
• Monthly Budget: Calculate how much you can comfortably allocate to monthly repayments, ensuring housing costs remain below 30% of your gross income.

Example: For a property priced at £278,000 (the average UK house price in early 2025), a 10% deposit would require £27,800 upfront, with additional funds needed for legal fees, Stamp Duty Land Tax (SDLT), and moving costs. 

Expert Tip: Meet with a property investment advisor or financial planner to create a budget tailored to your situation. Ensure you factor in all upfront and ongoing costs to avoid financial strain.

3. Ongoing Costs

Homeownership entails more than just mortgage repayments. Other ongoing costs include:

• Property Taxes: Stamp Duty thresholds remain favorable for first-time buyers, with no tax payable on properties up to £425,000. 
• Utilities and Maintenance: Rising energy prices have increased utility bills, with the average UK household spending approximately £2,500 annually on energy. Maintenance costs typically amount to 1%–2% of the property’s value each year.
• Homeowner’s Insurance: Premiums vary based on property type, size, and location.

Planning Tip: Create a detailed budget for ongoing costs to ensure your income and savings can comfortably cover them. Consider setting aside an emergency fund equivalent to six months of expenses for unexpected repairs or changes in financial circumstances.

4. Interest Rates

Interest rates heavily influence the cost of homeownership, as they determine monthly mortgage repayments. While rates are higher than the historical lows of 2021, they have stabilized following significant hikes in 2022 and 2023. Current trends suggest:

• Fixed Rates: Average 5.3%–5.5% for five-year fixed-rate mortgages.
• Variable Rates: Around 5.0%, tied to the Bank of England base rate.

Forecast for 2025: While no significant rate cuts are expected in the short term, steady inflation control could lead to gradual decreases in interest rates toward late 2025. 

Pro Tip: Lock in a fixed-rate mortgage if you prioritize predictable monthly payments. For buyers anticipating future rate drops, variable-rate mortgages may offer flexibility but come with higher risks.

5. House Prices

The UK housing market saw a slight decline in 2024, with average house prices decreasing by 4.5%. However, 2025 brings stabilization, with some regions experiencing modest growth:

• National Average Price: £278,000 in early 2025, down from £285,000 in 2023.
• Regional Variations: Affordable opportunities exist in the North West, Midlands, and parts of Scotland, while London and the South East remain more expensive but continue to attract demand.

Outlook for Buyers: Slight price corrections create opportunities for first-time buyers and those upgrading their homes. However, competition remains strong in areas with limited supply.

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In 2025, stabilizing house prices and steady interest rates present opportunities for buyers, particularly those with strong financial foundations. Before making a decision, evaluate how a home purchase aligns with your financial goals and lifestyle needs.

Meet with property and mortgage experts to create a plan that allows you to purchase a property that you can comfortably afford for the long term. They’re in a better position to analyse the current trends in the housing market and assess your preparedness — more on the market conditions below!

Current UK Housing Market Conditions and Forecasts (2025)

The UK housing market in 2025 is characterized by stabilization following price fluctuations in previous years. Buyers and investors are navigating a landscape shaped by changing interest rates, regional price variations, and evolving buyer demand. Here’s an updated analysis of current conditions and expert forecasts for the UK housing market.

House Prices: Stabilization with Regional Variations

• According to recent data, the average UK house price stood at £280,000 as of Q1 2025, a slight decrease of approximately 3.8% from the previous year. 
• Regional Trends:
  • North West: Prices have remained resilient, showing a modest increase of 2% in cities like Manchester and Liverpool due to strong rental demand.
  • London and South East: Prices have stabilized but remain high, averaging £550,000 in London.
  • Scotland and Wales: These regions continue to offer affordability, with average prices of £195,000 and £215,000, respectively.

Key Trends Driving the Housing Market in 2025

1. Housing Demand: Mixed Signals

Demand for housing has weakened slightly compared to the peak years of 2020–2022. Key factors include:

• Economic Uncertainty: Persistent inflationary pressures and geopolitical tensions have led to cautious consumer spending.
• Unemployment Rate: The UK unemployment rate rose slightly to 4.3% in Q1 2025, up from 3.7% in 2022. 
• Consumer Confidence: While confidence has improved from its 2022 low of -49 points, it remains fragile, limiting housing demand in certain areas. 

2. Oversupply of Properties

A key factor influencing price trends is the increasing number of properties on the market:

• Supply Growth: Property listings increased by 12% in 2025 compared to 2024, contributing to slower sales and slight price declines in less competitive markets. 
• Market Implications: Areas with high property listings, such as parts of the Midlands and North East, are seeing price softening, creating opportunities for buyers.

3. Interest Rates: Stabilizing but Elevated

Interest rates have stabilized at levels higher than their historical lows:

• Bank of England Base Rate: Currently at 5.25%, unchanged since late 2023. 
• Mortgage Rates: Average fixed mortgage rates range between 5.2%–5.5%, making affordability a key consideration for buyers.

While higher than in 2021, rates remain favorable compared to historical highs of the late 1970s, when rates exceeded 15%.

Market Outlook for 2025

Population Growth and Housing Shortages

Despite the current slowdown, the long-term housing market outlook remains positive:

• Population Growth: The UK population continues to grow, with demand for housing outpacing new construction in many areas.
• Urbanization: Cities like Manchester, Birmingham, and Leeds are expected to see continued demand due to economic development and infrastructure projects.

Investment Opportunities

For investors, the combination of slight price dips and high rental demand presents unique opportunities:

• Buy-to-Let Properties: Average rental yields remain strong at 5%–7%, particularly in university cities and areas with strong employment growth.
• Property Redevelopment: Older properties in up-and-coming areas offer potential for capital appreciation.

Risks to Monitor

Economic uncertainty remains a factor to consider:

• Inflationary Pressures: While inflation is expected to moderate, any unexpected shocks could impact interest rates and housing demand.
• Regional Variations: Areas with oversupply may face prolonged price stagnation, making location a critical consideration for buyers.

As always, expert advice from property investment experts can help determine the best course of action based on your unique financial situation. If you’re more concerned about the mortgage rates outlook and how it will impact house prices, check out the following section!

Mortgage Rates Outlook: How Affordable Are Houses Right Now?

As of November 2024, the UK housing market presents a complex landscape for prospective buyers. While house prices have experienced slight declines, mortgage rates remain relatively high compared to previous years. This combination necessitates a thorough evaluation of various factors before making a home purchase decision.

1. Financing Options

When considering a home purchase, it’s crucial to understand the available financing options:

• Fixed-Rate Mortgages: These loans offer stability, with interest rates and monthly payments remaining constant throughout the loan term. This predictability can be beneficial in a fluctuating interest rate environment.

• Adjustable-Rate Mortgages (ARMs): ARMs typically start with lower interest rates, which can adjust periodically based on market conditions. While initial payments may be lower, there’s a risk of increased payments if interest rates rise.

Given the current economic climate, many borrowers are opting for fixed-rate mortgages to lock in rates before potential future increases. It’s advisable to consult with mortgage lenders to determine eligibility and to select a mortgage product that aligns with your financial situation and risk tolerance.

2. Assessing Your Financial Situation

Before committing to a mortgage, evaluate your financial health:

• Income and Employment Stability: Ensure that your income is sufficient and stable to cover mortgage payments and other associated costs.
• Savings and Emergency Funds: Maintain adequate savings to cover down payments, closing costs, and unforeseen expenses.

• Debt-to-Income Ratio: Lenders typically prefer a debt-to-income ratio below 40%. Calculate your total monthly debt payments relative to your gross monthly income to assess affordability.

Engaging with a financial advisor or mortgage broker can provide personalized insights into how much you can afford to borrow and repay comfortably.

3. Ongoing Costs of Homeownership

Beyond the mortgage, homeownership entails several recurring expenses:

• Property Taxes: These vary by location and can significantly impact monthly housing costs.

• Homeowner’s Insurance: Protects against potential damages and is often required by lenders.

• Maintenance and Repairs: Regular upkeep is essential to maintain property value and prevent costly repairs.

• Utilities and Services: Monthly costs for electricity, water, heating, and other services should be factored into your budget.

It’s essential to account for these expenses to ensure that homeownership remains financially sustainable.

4. Interest Rates and Their Impact

Interest rates play a pivotal role in determining the affordability of mortgages. As of November 2024, the Bank of England’s base rate stands at 4.75%, following a reduction from 5.25% in August 2024. citeturn0news22

While this reduction is a positive development, mortgage rates remain elevated compared to the historically low rates of the early 2020s. For instance, the average two-year fixed-rate mortgage is approximately 4.52%, and the five-year fixed-rate mortgage is around 4.39%. 

Prospective buyers should monitor interest rate trends and consider securing a mortgage rate sooner rather than later, as future rate movements remain uncertain.

5. Current House Prices and Market Trends

The UK housing market has shown signs of cooling:

• Price Adjustments: In November 2024, the average asking price for UK homes decreased by 1.4% to £366,592, marking a more significant decline than the typical seasonal drop.

• Regional Variations: Affordability varies across regions, with the southeast of England and London being the least affordable, while the northeast of England, Scotland, and Northern Ireland are more affordable. 

While some forecasts predict modest price increases in 2025, the market remains influenced by economic conditions, interest rates, and government policies.

How Do Changes to Stamp Duty Rules Impact Buyers?

The HM Land Registry has recently announced several revisions to the Stamp Duty Land Tax (SDLT) that aim to encourage homebuyers and stimulate housing market activity. Basically, this means a lower cost for first-time buyers. Continue reading for more details, how it affects you as a buyer, and what other leverages you have.

Lower Costs for First-Time Buyers

For first-time buyers, the SDLT zero-rate threshold has increased from £300,000 to £425,000. This means first-time buyers will pay no SDLT on the first £425,000 of a property’s purchase price.

For example, a first-time buyer purchasing a £500,000 home would now pay SDLT of £3,750 rather than the previous £10,000, resulting in a tax saving of £6,250.

The higher threshold provides meaningful savings for first-time buyers in London and the South East, where house prices are typically higher. This revision to SDLT should positively impact first-time buyer demand and enable more first-time buyers to get on the property ladder, especially in higher-priced areas of the country.

Higher Demand for Sub-£425,000 Properties

With the increased tax threshold, demand is likely to rise for properties valued up to £425,000 as more buyers can now afford to enter the market. This additional demand could place upward pressure on prices for homes in this price bracket.

As an investor, targeting properties in up-and-coming UK areas where strong demand from first-time buyers already exists may lead to healthy returns from capital appreciation over the medium term.

Refinancing Options for Existing Landlords

For existing property owners, the new SDLT rates may provide an opportunity to refinance and withdraw equity from your home. With an additional £125,000 of your property now exempt from SDLT, you may be able to remortgage, withdraw tax-free equity, and invest in additional property without incurring the previous tax liability. This strategy allows you to tap into your existing assets to expand your property portfolio.

In summary, the recent changes to SDLT rates indicate positive news for both first-time buyers and existing homeowners. For investors, the amendments may provide opportunities to capitalise on increased demand and refinance existing properties.

Monitoring how the new rates impact the market, especially the sub-£425,000 sector, will help determine the optimal property investment strategy in the months ahead. Another factor to consider when evaluating whether now is the right time to buy a house is regional variations — let’s look into how house prices differ across regions in the next section.

Regional Variations: Where Are the Best Opportunities Right Now?

The UK housing market in 2025 continues to present regional variations that influence investment opportunities. While national trends indicate stabilization in property prices, significant regional differences offer buyers and investors the chance to capitalize on growth potential, affordability, or rental demand.

The North West: A Region on the Rise

The North West remains one of the most dynamic regions for property investment, driven by its strong economic growth and regeneration projects.

• Key Cities: Manchester, Liverpool, and Leeds.
• Average House Prices:
  • Manchester: £250,000
  • Liverpool: £220,000 (below the national average of £280,000). (Source: Rightmove)
• Growth Drivers:
  • Regeneration projects in Manchester (e.g., Northern Gateway) and Liverpool’s waterfront redevelopment have made these cities increasingly attractive to young professionals and families.
  • Improved connectivity via infrastructure projects like HS2 enhances the appeal of these cities for commuters and businesses.
• Investment Potential: High rental demand due to vibrant student populations and expanding job markets, particularly in tech and finance, makes the North West a hotspot for buy-to-let investments.

Pro Tip: Look for properties near universities or tech hubs to maximize rental yields, which average 6%–7% in some North West areas. (Source: JLL Residential)

The South West: A Stable and Desirable Region

The South West continues to attract attention for its blend of urban vibrancy and rural charm, making it a desirable location for homebuyers and investors.

• Key Cities: Bristol, Bath, Exeter.
• Average House Prices:
  • Bristol: £330,000
  • Bath: £400,000 (higher than the national average). (Source: Zoopla)
• Growth Drivers:
  • The tourism industry and university towns ensure stable rental demand, particularly in Bristol and Exeter.
  • Long-term price appreciation, with property values growing by an average of 15% between 2020 and 2024, continues to appeal to investors seeking capital gains.
• Investment Potential: Properties in city centers or near tourist attractions offer strong rental demand and consistent returns.

Pro Tip: Target well-maintained properties in up-and-coming neighborhoods in Bristol for a balance of affordability and potential price appreciation.

London and the Southeast: Premium but Stable

London and the Southeast remain the most expensive yet stable regions of the UK housing market, making them ideal for long-term investments.

• Average House Prices:
  • London: £550,000 (national high).
  • Southeast (e.g., Bracknell): £400,000. (Source: ONS)
• Growth Drivers:
  • Limited housing supply coupled with consistent demand ensures price stability.
  • Proximity to major employment hubs and ongoing development projects maintain investor interest.
• Top Commuter Towns: Areas like Reading, Bracknell, and Luton continue to experience growth due to their connectivity to London via fast rail services.

Investment Potential: While rental yields are lower than in the North, averaging 3%–5%, the long-term price appreciation makes London and the Southeast attractive for capital preservation.

Emerging Markets: Scotland and Northern Ireland

• Scotland: Edinburgh and Glasgow are experiencing modest price growth, with average house prices around £220,000. Strong rental demand from students and young professionals supports investment potential.
• Northern Ireland: Belfast remains one of the most affordable cities in the UK, with an average house price of £185,000, offering higher rental yields compared to many regions. (Source: Halifax)

Key Considerations for Investors

• Market Stability: Focus on regions with strong economic fundamentals, such as the North West and Southeast.
• Rental Yields vs. Capital Gains: The North West offers higher rental yields, while London and the Southeast deliver stable long-term price growth.
• Regional Infrastructure: Areas with new transport links or regeneration projects (e.g., HS2 in Birmingham) often experience higher price appreciation.

In summary, opportunities currently exist across the UK housing market, but significant regional variations persist. Investors must analyse the dynamics of each region carefully to find the locations and properties that best match their investment objectives and risk tolerance.

With the range of options available, suitable opportunities can be found regardless of an investor’s preferences for capital gains, rental income, or both — the key is conducting thorough due diligence to determine the best time to buy a house. We provide more on finding the best deals below!

6 Tips for Finding the Best Deals in Today’s Market

While UK house prices have increased by over 2.5% in the past year, there are several good deals to be found, especially if you know where to look.

By utilising the following strategies, you can uncover properties with strong growth potential at a reasonable price when house hunting:

1. Work with property investment experts.
2. Utilise property listing sites.
3. Consider property auctions.
4. Look for repossessions.
5. Consider property redevelopment.
6. Network to find off-market deals.

1. Work with property investment experts.

Having property investment experts like Baron and Cabot by your side when hunting for properties means you’re working with a wealth of knowledge. We’ve been in the game long enough to help you pick the right property suitable for your needs.

We’ll also give you access to properties in well-researched locations that may not be available to the general public. Whether you’re making your first investment or expanding your portfolio, we provide insights that can help maximise your returns. Contact B&C now!

2. Utilise property listing sites.

A staggering 100% of homebuyers now utilise websites like Zoopla, Rightmove and PrimeLocation when searching for their next home. These sites provide a convenient overview of properties currently on the market that match your specifications. Monitor these sites regularly for new listings and price changes to spot good deals.

3. Consider property auctions.

Property auctions are an ideal place to find a bargain, with some selling at up to 20–30% below market value. Do thorough research on any property before bidding to determine the maximum price you are willing to pay. Arrive at the auction early, set a firm budget and don’t get caught up in the excitement of bidding. Also, be prepared for additional fees like the auctioneer’s commission.

4. Look for repossessions.

When homeowners default on their mortgage payments, the property is repossessed by the lender. Lenders are often willing to sell repossessed properties at a lower price to recover their costs quickly. Check sites that allow you to filter specifically for repossessed properties. Work with an agent who has experience dealing with lenders and the legal processes involved in purchasing repossessed homes.

5. Consider property redevelopment.

Purchasing a run-down property with the intention to renovate and resell at a profit, known as property redevelopment, can yield high returns on investment. However, property redevelopment also carries risks like going over budget, failing to sell at a profit or running into legal issues.

Partner with an experienced developer to navigate the challenges. When done right, redeveloping and flipping distressed properties is one of the most lucrative paths to real estate wealth.

6. Network to find off-market deals.

Speaking to people within the industry is one of the best ways to find properties before they are officially listed. Let family, friends, and colleagues know you are on the hunt for property. Some of the best deals are found through word-of-mouth.

Attend local meetups and join online groups to make valuable connections in the real estate community. Partnering with Baron & Cabot means access to valuable off-market deals — which are usually under-priced to get more investors on board.

By taking a multi-pronged approach to your property search, utilising the services of a property investment expert, and acting quickly when an opportunity arises, you can find attractively priced investment properties even in a strong seller’s market.

While financial constraints may cast doubts as to whether now is a good time to buy houses or even consider alternatives like renting, data shows this is not always the best approach to property, as we will discover in the next section.

Alternatives to Buying: Renting vs. Buying Analysis

If you are considering renting properties in 2025 instead of buying, it’s important to be aware of the benefits each offers and how they compare before making a decision.

Renting offers more flexibility.

Compared to buying a property in 2025, renting offers more flexibility and mobility. As a renter, you’re not tied down to a mortgage and can move to another rental relatively easily if needed for work or personal reasons.

You also have more freedom to relocate to different cities or even countries without the burden of selling a property. For many young professionals in their 20s and 30s, the flexibility of renting is appealing as they navigate new jobs and relationships. However, buying offers more benefits.

Buying is cheaper than renting in the long run.

While renting may seem more affordable in the short term, buying a home is usually cheaper than renting in the long run. Buyers can lock in a low, fixed rate when mortgage rates fall and build equity in an asset. Rent, on the other hand, is likely to increase over time with inflation and demand. For those planning to stay in one place for at least 5–10 years, buying could save money.

Buying builds equity and wealth.

Purchasing a property is an investment. As you pay down your mortgage, you build equity in the home. You can then leverage that equity through a cash-out refinance to pay for home improvements, education, or other major life expenses.

When it’s time to sell, you can make a sizable profit, especially if you’ve owned the home for many years. Renting, on the other hand, provides no opportunity to build wealth through home equity or price appreciation.

In summary, whether buying or renting makes more sense depends on your priorities and timeline. If flexibility and affordability are most important, renting may be better in the short term. In the long run, buying offers financial benefits as an investment and a hedge against inflation when mortgage rates decline. The choice ultimately comes down to your needs and risk tolerance as an investor or homeowner. Reach out to Baron & Cabot today to further discuss your investment goals.

Should I buy a house now or wait until 2025 in the UK?

Deciding to buy a house now or waiting until 2025 in the UK depends on market timing. The Office for Budget Responsibility forecasts a dip in property as house prices fall. There is an expected average decrease of 7.6% between December 2024 and early 2025, suggesting potential benefits for those who can wait.

Is it a good time to buy a house now in the UK?

Deciding on the perfect time to buy a house in the UK can be challenging. With mixed forecasts for 2025—some experts predict a decline in house prices, while others anticipate a 3–4% increase—it all comes down to individual financial situations and market risk tolerance. Consider both scenarios before making a decision.

Will mortgages go down in 2025 in the UK?

In the UK, mortgage rates in 2025 could potentially decrease if the downward trend in inflation from 2023 continues. Industry insiders are hopeful that average mortgage rates might drop below 5% again, making it crucial for homebuyers to review deals carefully to find the best fit for their personal circumstances.

Do sellers prefer cash buyers?

Sellers often favour cash buyers, especially if there are property issues complicating mortgage acquisition. Cash transactions can be smoother and quicker. They’re particularly appealing to sellers seeking certainty or dealing with homes that require significant repairs.

How much less should you offer on a house when paying cash in the UK?

In the UK, cash buyers might have the leverage to offer 20 to 25% less than the asking price, given the current market conditions. This bargaining power stems from the attractiveness of a cash deal to sellers, who often value the speed and security it offers.

Are house prices going to drop drastically?

Current trends suggest a significant drop in average house price prices is unlikely, as the latest official figures indicate a year-on-year decrease with recent signs of resurgence. This points to a potential stabilisation or even an upturn in the near future rather than a drastic fall.

Conclusion

The UK housing market in 2025 offers both challenges and opportunities. While house prices have stabilized after 2024 declines, mortgage rates remain elevated compared to historical lows. Regional variations create opportunities for buyers, especially in areas with infrastructure development or strong rental demand. Economic uncertainties persist, but moderating inflation provides cautious optimism.

To decide if now is the right time to buy, assess your financial readiness, including income stability and savings. Focus on regions aligning with your goals, whether affordability or long-term growth. Remember, the property investment experts at Baron & Cabot are always available to help you make the best investment decisions — contact us now to discuss your investment goals.

Disclaimer: Any information provided by Baron & Cabot does not constitute financial advice and is for educational purposes only.