The London property market is gaining momentum this spring, fuelled by lower mortgage rates, strong buyer demand, and rising prices. The average UK house price reached £271,000 in March 2025, a 6.4% year-on-year increase, with asking prices in May hitting a record high of nearly £380,000. In London, average prices remain steady at around £550,000, with modest annual growth of 0.8%. This market activity is largely driven by improved mortgage affordability, following the Bank of England’s recent interest rate cut to 4.25%.
Mortgage rates are now easing across the board, with many lenders offering fixed-rate deals below 4% for buyers with strong deposits. Tracker mortgage holders have seen average monthly payments drop by around £29, while standard variable rate (SVR) borrowers save approximately £14 per month. Some lenders, such as Hodge, have also relaxed affordability checks, boosting borrowing capacity by up to 20%. As a result, mortgage approvals are expected to exceed 780,000 this year – the highest level since 2021 – reflecting renewed buyer confidence.
For buyers, these developments present a window of opportunity. Lower mortgage rates make it more affordable to step onto the ladder or move up, while improved lending criteria mean buyers can potentially borrow more. However, competition is fierce, especially in popular London postcodes, so having a healthy deposit, flexibility on location, and a realistic approach to pricing are key. First-time buyers, in particular, may find success by considering less expensive areas, as 67% of them are doing.
Sellers are also well-placed, with demand high and well-presented homes generating strong interest. However, as stamp duty cuts come to an end, buyers may negotiate harder, so it’s important to price competitively, especially in areas where stock levels are rising. London listings, for example, have increased by 17% compared to a year ago.
For property investors, the picture is mixed. While house price growth is steady, not explosive, rental yields remain strong, with average UK rents up 7.4% in the past year. This makes property an attractive long-term investment, though landlords should stay informed about regulatory changes impacting the sector.
In summary, the London property market is showing resilience. Mortgage rates are easing, prices are holding steady, and both buyers and sellers are active. For those looking to buy, now is a good time to lock in favourable mortgage deals and consider expanding search areas. Sellers can benefit from strong demand but should price realistically. Investors, meanwhile, can still capitalise on robust rental growth.
Whether you’re buying, selling, or investing, our team is here to help. Get in touch today for expert advice tailored to your situation, and make the most of the current market opportunities.