UK Housing Market Resilient Amid New Mortgage Affordability Rules

The UK housing market has exhibited resilience during the traditionally slow summer months, largely attributed to new mortgage affordability rules that have enhanced buyers' purchasing power. According to a report by Zoopla, the average house price in June 2025 was £268,400, reflecting a modest increase of 1.3% from the previous year. This uptick in prices, however, comes amid a record number of homes available for sale, facilitating a ‘buyer’s market’ that has kept price increases in check.

Historically, the UK housing market experiences a slowdown during the summer, but this year’s landscape has significantly diverged from that trend. Richard Donnell, Executive Director of Research and Insight at Zoopla, noted, “We’re seeing healthy levels of demand and sales, but this isn’t sparking faster price inflation. In fact, more homes for sale, particularly across southern England, is reinforcing a buyer’s market, keeping price rises in check.” The report highlighted that buyer activity in July 2025 was 11% higher compared to July 2024, leading to an 8% increase in agreed sales.

In the context of ongoing economic adjustments, the UK government’s recent changes to mortgage affordability assessments have allowed potential homeowners to borrow up to 20% more than they could just three months prior. These modifications, alongside stable mortgage rates, have been pivotal in invigorating market activity. Donnell emphasized, “Less stringent affordability testing has boosted buying power.” Despite these encouraging indicators, Zoopla has adjusted its forecast for house price growth in 2025 from an anticipated 2% to 1%.

The report from Zoopla also illuminated regional disparities in house price growth. While Scotland, Wales, and northern England are witnessing more robust increases—ranging from 2% to 3% annually—southern regions, particularly London and the southeast, are experiencing a stagnation in price growth, with increases of just 0.2% and 0.3%, respectively. Areas such as West London have faced declines, with some neighborhoods reporting drops of up to 1.5%.

Furthermore, average asking rents across the UK, excluding London, rose by 1.2% to a record £1,365 per month in Q2 2025, with London rents hitting £2,712. Despite this growth, the overall pace of rent increases has decelerated since 2023 as market conditions stabilize. Rightmove’s property expert Colleen Babcock noted that while landlords are facing challenges in securing tenants, the broader trend indicates a slow rebalancing toward pre-pandemic levels of supply and demand.

In conclusion, while the UK housing market displays signs of resilience against seasonal downturns, the interplay of affordability rules, regional disparities, and rent dynamics will shape its trajectory moving forward. As the market continues to adjust, stakeholders will be closely monitoring these developments to assess their long-term implications on housing affordability and availability.