UK Property Market Update – February 2025

Despite continued global uncertainties, the UK property market remains a haven of stability for investors. While certain sectors are volatile, the UK real estate market is a stable and robust asset class that delivers stable returns and long-term growth. For an investor seeking a stable investment vehicle, the UK property market is again proving to be a solid platform.

The most recent figures from Nationwide reinforce that UK house prices have been increasing for six consecutive months, increasing 0.4% in February alone. The rate of growth is now 3.9% per annum, above early 2024 projections. Savills has also updated its projections to a 4% rise in average house prices during the course of the year.

The Nationwide House Price Index, which is widely seen as being market leading, is constructed from mortgage approvals as opposed to sales and hence is a good measure of market direction. This sustained expansion is indicative of a tightening market based on rising owner-occupier activity—a core catalyst of long-term housing value.

January listings were also 20% above the five-year average, meaning that buyers are coming back to the market. This higher demand is the beginning of the next phase of house price growth.

Why Home Ownership Drives the UK Property Market

For property investors, the cultural appeal of property ownership in the UK is the top priority. The aspiration to own property continues to be deeply embedded in British culture. Rightmove, a leading UK website, registered a record 16.4 billion minutes of property searches in 2024, an indication of continuous demand for property ownership.

Despite increasing numbers of renters, for many, homeownership is the aspiration, and this lies behind continued demand for housing property. This continued demand underpins stability in the UK housing market and makes it an attractive investment for both local and international investors.

Where Should UK Property Investors Be Looking in 2025?

One of the most noteworthy trends to emerge within the February housing statistics is that new house completions are decreasing. 2024 recorded the lowest number of new home completions since 2017, and the shortages were most acute in London, the South East, and South West. The North West and West Midlands offer a better-balanced market, stability but not without perhaps slower price increases. Those wishing for high capital growth can focus on London and the commuter belt, where demand continues to exceed supply.

Outer London and Commuter Belt Reveal Solid Growth Potential

Outer London boroughs and commuter towns are growing more appealing to investors. Build-to-rent completions declined by 64% in 2024, with more supply gaps and increasing rental growth potential. It is one of the most encouraging times to invest in the capital since the pandemic.

Most recent figures released by Knight Frank show that South West London demand has risen by 29% this year, compared to a drop of 5% in Prime Central London. Demand is also rising in the Home Counties, specifically Surrey, along the southwestern corridor of London. Outer London and Commuter Belt Showing Excellent Growth Potential

A Golden Investment Prospect

UK property investment prospects for 2025 look highly favorable. With further interest rate cuts expected from the Bank of England, affordability will keep rising, attracting even greater numbers of buyers to the market. A chronic lack of stock keeps driving both rental yields and capital values upwards.

With demand increasing, interest rates falling, and good long-term prospects, London and the commuter belts are the ideal target for property investors. It's time to take advantage of the UK's stable and thriving property market. Contact Magnate Assets today to locate investment opportunities that suit your portfolio.