UK housing market shows resilience with rise in asking prices
After three months of falling asking prices, the UK housing market showed signs of resilience in September 2025. Rightmove’s House Price Index recorded a 0.4% monthly rise in asking prices—adding £1,517 to bring the national average to £370,257. While modest, this increase is in line with the 20-year September average (+0.5%) and could signal the start of a more active autumn selling season.
But beneath the headline figure lies a more complex story: annual growth remains negative, regional divides are widening, and both policy uncertainty and rental market cooling are shaping expectations for the months ahead. Here’s what landlords, investors, and homebuyers need to know.
September snapshot: prices edge higher
- Asking prices up 0.4% MoM: The first monthly rise since May.
- Annual change still negative: Down 0.1% (£502) compared with September 2024—the first annual decline since December 2023.
- Regional divergence: London and southern England continue to drag the annual figure down, while activity in northern and midland regions is steadier.
- More homes for sale: Housing stock for sale is up 9% year-on-year in the South, compared with just 2% elsewhere. This uneven growth is keeping a lid on asking prices in higher-value regions.
- Sales agreed up 4% YoY: Buyer demand remains firmer than expected given elevated mortgage rates.
What’s driving the bounce?
1. Seasonal factors
September traditionally brings a lift in activity after the summer lull. Families aim to move before Christmas, and sellers often test the market at slightly higher levels. This year’s 0.4% increase is almost exactly in line with the long-run September average of 0.5%.
2. Price stability in affordable regions
Regions with lower entry prices, such as the North East and Scotland, continue to attract both first-time buyers and buy-to-let investors. These markets have less exposure to affordability ceilings that cap demand in London and the South.
3. Resilient buyer demand
Sales agreed were up 4% compared to last year, suggesting that when sellers set realistic prices, buyers are prepared to commit. This resilience is notable given mortgage rates remain significantly higher than during the ultra-low era of the 2010s.
Housing market in context: annual growth slowing
While asking prices rose in September, the broader housing market picture remains subdued. Official data from the Office for National Statistics (ONS) shows annual house price growth slowed to 2.8% in July, down from 3.6% in June. That represents the sharpest deceleration since spring, when activity was boosted by tax-related deadlines.
The average UK house price now stands at around £270,000, with London remaining the priciest region despite annual declines.
Rental growth cools
For landlords, the other side of the equation is rental income. After two years of rapid rent inflation, the pace is easing. ONS data shows:
- Private rental prices rose 5.7% YoY in August—down from 5.9% in July.
- This marks the slowest annual increase since December 2022.
While rents remain high by historic standards, the moderation suggests affordability pressures are starting to weigh on tenants. Landlords may face limits on how far they can push rents in the near term, especially as household incomes remain squeezed by higher living costs.
Supply dynamics: stock is uneven
Rightmove’s data highlights a stark regional contrast in supply growth:
- South of England: Number of homes for sale is 9% higher YoY. More supply plus affordability ceilings are softening prices.
- Rest of UK: Stock levels have grown just 2% YoY, which helps support values.
For investors, this means yield opportunities are still strongest where stock is tighter and demand remains high. Conversely, oversupply in southern regions could keep a lid on returns.
Policy clouds: tax and planning jitters
The autumn selling season coincides with rising speculation about potential property tax reforms. While there has been no immediate reaction from movers, analysts expect jitters over the next three months as details emerge from the Treasury.
At the same time, the government has pledged to accelerate housebuilding—a key plank of its growth strategy. Yet inter-departmental wrangling could slow delivery. For example, new environmental and infrastructure policies may complicate planning approvals, tempering the pipeline of new homes.
For developers and investors, this uncertainty creates a push-pull dynamic: confidence that supply constraints will underpin prices, but concern that policy changes could weigh on demand.
Regional breakdown: where resilience is strongest
London & South East:
- Asking prices fell 0.4% YoY despite the September bounce.
- Sales agreed still rose 3% YoY, but affordability remains the main drag.
North & Midlands:
- Activity is firmer, supported by lower entry prices and stronger yields.
- Sales agreed up around 5% YoY in some regions.
Scotland & Wales:
- Both markets show steady activity, with Scotland in particular benefiting from relatively high rental yields.
Implications for landlords
Yields under pressure in the South
London’s average gross yields are now around 5.1%, significantly below the national average of 5.8%. Higher buy-in prices and moderating rents limit income potential.
Stronger returns in the North
By contrast, Sunderland, Aberdeen, and Burnley continue to offer 8%+ gross yields, with low purchase prices magnifying rent-to-price ratios.
Rent growth easing
The slowdown in rent inflation means landlords should budget conservatively. Stress-test yields using flat rents rather than assuming further sharp rises.
Regulatory horizon
Beyond market forces, landlords face sweeping reforms under the upcoming Renters’ Rights Bill—including the end of Section 21, new tenancy rules, and stricter property standards. Compliance costs will need to be factored into yield calculations.
Investor takeaways
- Expect moderation, not momentum. September’s 0.4% rise is seasonal rather than structural. Don’t assume it heralds a return to rapid price growth.
- Look north for income. With gross yields above 7% in much of the North East and Scotland, landlords seeking cash flow will find stronger opportunities there.
- Stress-test at today’s rates. Mortgage costs remain elevated; ensure investments work even with conservative rent assumptions.
- Policy risk is real. Keep an eye on Treasury announcements this autumn, which could affect capital gains tax, stamp duty, or landlord allowances.
- Tenant affordability ceiling. Even with housing undersupply, renters are reaching the limits of what they can pay. Void periods may rise if landlords overprice.
Outlook: autumn and beyond
The most likely scenario for the housing market in late 2025 is price stability with mild regional growth differences. The North and Scotland could see modest price gains, supported by affordability and yields, while London and the South remain flat to slightly negative.
For 2026, much will hinge on:
- Interest rates: Any Bank of England rate cuts could revive buyer demand and lift affordability.
- Government policy: Tax changes or housing supply initiatives could shift momentum quickly.
- Labour market health: With unemployment stable at 4.7%, employment remains a key support for housing demand.
In short, the UK housing market has avoided the steep correction many feared, but headwinds remain. For landlords, the best strategy is region-specific investment, conservative yield planning, and regulatory readiness.
Final thoughts
The September uptick in asking prices shows that the UK housing market retains underlying resilience—even in the face of higher mortgage rates, policy uncertainty, and slowing rental growth. Sellers are regaining some confidence, buyers remain active where pricing is realistic, and landlords who position themselves smartly can still find opportunities.
Yet the broader trend is one of moderation, not momentum. For landlords and investors, the challenge is balancing short-term resilience with long-term structural change—ensuring portfolios remain profitable, compliant, and aligned with where tenant demand is strongest.
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