After two years of high inflation, rising interest rates, and affordability concerns, new economic data suggests the UK housing market could be entering a more stable phase. With wages growing faster than inflation and mortgage rates easing, confidence is gradually returning – and that’s good news for buyers, sellers, and investors.
As we move into summer 2025, key indicators are pointing in the right direction. Affordability is improving, employment remains steady, and more competitive mortgage deals are reappearing. While the market isn’t booming, the fundamentals are strengthening – creating opportunities for those prepared to act strategically.
The Data Behind the Shift
The latest ONS figures show average UK weekly earnings (excluding bonuses) rose by 5.9% in the year to April. Inflation, by contrast, fell to 2.0% in May – meaning real wages are rising for the first sustained period in over two years. This is boosting household confidence and buying power.
Meanwhile, the Bank of England held base rates at 4.25% this month but hinted that cuts could follow later this year. Markets expect two reductions by the end of 2025. Some lenders have already responded, with average five-year fixed mortgage rates now around 4.35%, down from over 6% last summer.
Unemployment remains low at 4.3%, further supporting market confidence. With stronger incomes and job security, mortgage approvals are ticking up and a wider range of products – including low-deposit and high-LTV options – are becoming available again.
Impact on Buyers, Sellers and Investors
For first-time buyers, the market is becoming more accessible. Rising wages, softening mortgage rates, and a slight dip in average asking prices (Rightmove reports a 0.3% fall in June) are improving affordability. While deposits remain a hurdle, lender flexibility is improving – with some 95–100% LTV deals re-emerging.
Sellers are beginning to see renewed activity. Rightmove also noted a 6% rise in buyer enquiries in early June. However, buyers remain price-sensitive, so realistic pricing is key to securing a sale in today’s value-driven market.
Investors may want to reassess strategies. Rental growth has cooled – with annual rent increases now around 2.8%, the slowest in years – but capital growth prospects are improving, especially in regions like the North West and Midlands where wage growth is strong.
Final Thoughts
The UK property market is not surging, but it is stabilising. With better affordability, a steady job market, and improved mortgage conditions, conditions are more balanced than they’ve been in years. For many, this may be a smart window to buy, sell, or invest with greater confidence.
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