BLOGS

The UK property market finds itself in an unusual equilibrium. Prices have stopped falling—and in some regions are even edging upwards—yet the number of homes actually changing hands remains stubbornly low. For investors, developers, and agents alike, understanding this disconnect is essential for navigating the year ahead.

Price stabilisation masks deeper market challenges

REalyse data shows average house prices across UK nations have moved within a relatively narrow band over the past 12 months. England's average sold price of approximately £340,000 represents a year-on-year decline of around 4%, while Scotland and Wales have recorded modest gains of 1–3%. On a price-per-square-foot basis, changes are similarly contained, ranging from a 3% decline in England to nearly 2% growth in Scotland.

This stabilisation marks a notable shift from the volatility seen in 2022–2023, when rapid interest rate rises triggered sharper price corrections in some markets. However, the apparent calm in headline price figures obscures a more concerning trend: the market is stabilising at significantly reduced activity levels.

Transaction volumes remain well below historic averages

While prices have steadied, the volume of completed sales tells a different story. REalyse analysis of Land Registry transaction data reveals year-on-year declines of 15–25% across England and Scotland in recent months. This places current activity levels substantially below the 10-year average, with some regions recording their lowest transaction volumes since the early months of the pandemic.

The disconnect is particularly stark when viewed alongside new listings data. New instructions remain robust—suggesting sellers are willing to test the market—but the conversion rate from listing to completion has declined. Properties are taking longer to sell, with average days on market hovering around 75–100 days for much of 2025, reflecting the challenges in matching buyer expectations with asking prices.

Several factors contribute to this sluggish activity:

• Mortgage affordability remains stretched: Despite base rate cuts, typical mortgage rates remain above 4%, meaning monthly payments are still substantially higher than buyers had budgeted for during the low-rate era. Affordability stress tests continue to constrain maximum borrowing amounts.

• Fall-through rates have increased: Industry estimates suggest that between 25–35% of agreed sales are falling through before completion, driven by survey issues, chain collapses, and buyer finance difficulties. This wastage adds friction and delays throughout the market.

• Pricing standoffs persist: Sellers who purchased during the 2020–2022 boom are often reluctant to accept offers below their original purchase price, while buyers—aware of the higher cost of borrowing—are equally unwilling to overpay. This creates an impasse that suppresses activity even when both parties are nominally motivated.

Regional variations reveal a fragmented market

The national picture masks considerable regional divergence. REalyse data indicates Scotland has shown relative resilience, with prices per square foot rising modestly and transaction declines less severe than in southern England. Wales has followed a similar pattern, with price growth outpacing England and transaction volumes holding up somewhat better.

Within England, the picture is highly localised. London and the South East—traditionally the most expensive markets—have experienced sharper price corrections and deeper transaction declines, as affordability constraints bite hardest where prices are highest. By contrast, some northern cities and commuter towns have seen steadier demand, supported by relatively better affordability ratios and continued investor interest in rental yields.

For property professionals using platforms like REalyse, these regional variations highlight the importance of granular, postcode-level data when advising clients or underwriting investments. National averages increasingly fail to capture the divergent trajectories playing out across the UK's housing markets.

What happens next?

The market's current state—stable prices but subdued activity—could persist for some time. For transactions to recover meaningfully, one or more of the following would likely need to occur:

• Further mortgage rate reductions: If the Bank of England continues its easing cycle and lenders pass through cuts to borrowers, improved affordability could unlock pent-up demand among first-time buyers and movers.

• Vendor price adjustments: Sellers who accept that 2021–2022 prices may not return imminently could accelerate the price discovery process and bring more deals to completion.

• Economic confidence returning: Broader improvements in consumer confidence, wage growth, and employment security would support larger financial commitments like home purchases.

Until then, the UK property market is likely to remain in a holding pattern—prices stable enough to avoid panic, but activity too low to signal a genuine recovery. For investors and developers, this environment demands patience, rigorous due diligence, and a willingness to look beyond headline figures to the underlying transaction dynamics that shape real market opportunity.