The UK Property Market: Expert Views on Growth, Inflation, and Rate Adjustments

By Kate Faulkner, Property Market Expert

Despite ongoing global and domestic uncertainties, the UK property market continues to prove resilient, offering promising opportunities for savvy investors. Inflation and base rate changes are undoubtedly shaping the landscape, but with strategic insights, investors can still find significant returns and long-term growth potential.

Economic Outlook: Not Perfect, But Not a Crisis

The UK economy is facing challenges, but it’s far from being in a crisis. Inflation remains stubbornly above 3%, surpassing the Bank of England’s 2% target. This inflationary pressure has been largely driven by rising wages. However, there’s some good news: wage growth, which has been robust in recent years, appears to be slowing, which could help curb inflation in the second half of the year.

What This Means for Interest Rates and the Property Market

The Bank of England’s Monetary Policy Committee (MPC) has a tough balancing act ahead. While inflation and wage growth remain elevated, the overall economic performance suggests that the need for aggressive interest rate hikes may be diminishing. As a result, we may see rate cuts as early as August 2025, with some forecasts pointing to a reduction in rates by the autumn. If interest rates fall, it would provide a much-needed boost to property and mortgage activity.

However, the prime property market, particularly in London, continues to face pressure from high levels of Stamp Duty Land Tax and the loss of Non-Doms. Despite this, the broader market shows resilience with a diverse range of property prices rising, stabilising, and, in some areas, dipping slightly.

The Resilience of the UK Property Market: Key Insights

According to the latest property market indices, several key trends are emerging that indicate strength and optimism in the UK property market:

1. Rightmove reports that new seller asking prices have risen by 0.6% to reach a record £379,517, despite a more subdued late Spring market. However, buyer demand has slowed slightly, as the market adjusts to the end of the stamp duty relief. Nevertheless, transactions remain solid, with new properties coming to market up 14% compared to last year.
   
   
2. Nationwide notes that house price growth increased marginally in May, edging up by 3.5%, compared to 3.4% in April. The data suggests that growth in rural areas continues to outpace more urban locations, with a 23% rise in house prices over the past five years in rural areas.
   
   
3. Zoopla reports that sales agreed in May were the highest in four years, up 6% from the previous year. The increase in sales is attributed to a rebound from the Easter lull and the initial reaction to the end of the stamp duty relief. As more properties come onto the market, the chances for buyers to find the right property increase, further encouraging activity in the summer months.
   
   
4. E.surv suggests that while some markets have seen temporary price softening due to higher stamp duty costs, there’s an expectation that the market will strengthen over the medium- to long-term, aided by easing affordability rules and potentially lower interest rates.
   
   

What Does This Mean for Property Investors?

For investors looking to make the most of these market conditions, there is plenty of optimism. With high rental demand and strong capital growth prospects, especially in regions outside of London, the UK property market offers enduring value. As we’ve seen with The Crown, Andover, a contemporary residential development in Hampshire, investment opportunities continue to thrive. The combination of modern design, great location, and long-term capital growth potential make developments like these particularly appealing for investors.

Magnate Assets’ Comment

"Despite the challenges presented by inflation and base rate changes, we remain confident in the long-term prospects of the UK property market. Our focus on high-quality developments, such as The Crown, Andover, continues to provide investors with stable returns and growth opportunities. As the market adapts, we’re excited to see even greater potential for returns on investments in the coming months."

Looking Ahead: A Steady Market with Promising Growth

The outlook for the property market remains cautiously optimistic, especially as we enter the summer months. While price fluctuations are to be expected, the underlying strength of the market provides a solid foundation for future growth. For investors, now is a great time to explore opportunities in areas where demand remains high, and supply is limited.

As always, investors should stay informed and be prepared to adjust their strategies in response to market changes. But with the right knowledge and insight, the UK property market continues to offer solid returns and exciting opportunities for those willing to act strategically.