Are House Prices Falling in the U.K. ?

Are House Prices Falling in the U.K.

At first glance, the short answer is: not uniformly, and not yet. The UK housing market is showing signs of cooling and softening in places, but widespread, sustained falls in house prices are not evident (so far). Instead, the picture is one of mixed signals, regional divergence, and caution creeping into the market.

Any discussion must separate house price levels (which remain near historic highs) from rates of change (which are slowing, or in some months marginally negative). It also needs to account for different geographies (London vs the North, for example) and property types.

Let’s dig into recent data and the drivers.

What recent data says: Annual growth is still positive (but decelerating)

Multiple indices show that UK house prices are still rising year-on-year in many places although the pace of growth has slowed.

• According to the UK House Price Index, in the year to July 2025, average UK house prices rose by 2.8 % (non-seasonally adjusted). GOV.UK+1

• However, in earlier months, growth rates were higher: for instance, in March 2025, the data showed a 6.4 % annual increase overall. GOV.UK

• Nationwide reported that prices slipped by 0.1 % month-on-month in August 2025 (though still positive year-on-year), marking one of the few monthly declines in recent memory. Reuters

• Later, in September 2025, Nationwide saw a rebound: prices rose 0.5 % month-on-month, and the annual rate ticked up slightly. The Guardian

• Halifax (another major index) reported that house prices rose just 1.3 % year-on-year in September 2025, the slowest annual increase since April 2024, and saw a 0.3 % month-on-month decline. Reuters+1

  
  

So: positive annual growth, but weaker and more volatile in recent months.

Asking prices and listings: some softening

Another useful signal comes from asking prices (the prices sellers list), which often respond more quickly to shifts in sentiment than final sale prices.

• Rightmove reported that in June 2025, asking prices slipped by about 0.3 %, an “unusual dip” compared to the typical June rise. The Guardian

• More strikingly, in July 2025, the average price of properties being newly listed fell by 1.2 % compared to June, the steepest monthly drop in more than 20 years. The Guardian

• Rightmove itself revised down its forecast for 2025 price growth from 4 % to 2 %, citing heightened competition amongst sellers and weakening demand at higher price bands. MoneyWeek+1

• According to Rightmove’s house price index, roughly 34 % of properties for sale have had their asking prices reduced which is a relatively high rate of “price cuts” for this stage in the market. Rightmove

  
  

These signals suggest sellers are increasingly testing lower pricing or retreating from premium pricing, reflecting buyer hesitation or affordability constraints.

Regional and segment variation

The national averages mask wide divergences across regions and property types.

• London (and especially central areas) are seeing the weakest growth or mild declines in certain submarkets. For example, in Kensington & Chelsea, average house prices in July 2025 were £1,362,000, down 2.5 % from a year earlier. Office for National Statistics

• In contrast, some regions in the north and in Scotland or Northern Ireland continue to see stronger growth. The North East, for instance, has been amongst the stronger-performing English regions. GOV.UK+2House of Commons Library+2

• In the South West, growth is tepid: in some months annual inflation was in the 1–2 % range, sometimes even lower. Office for National Statistics+2GOV.UK+2

• The higher end of the market appears more vulnerable: demand for properties above £500,000 has dropped, and supply at that level is more elastic to changes in taxes or interest rates. MoneyWeek

• Flats and apartments tend to lag behind larger houses. Halifax’s data show that flats saw slower growth in recent periods, as buyers tend to shift toward more space when interest conditions relax. lloydsbankinggroup.com

  
  

So some places and types of property are beginning to feel downward pressure more acutely than others.

Why might house prices begin falling?

It helps to examine what pressures are acting to slow or reverse growth. Here are some of the key forces:

1. Affordability constraints & interest rates

Mortgage rates remain historically elevated compared to the ultra-low rates of the post-2008 era. High borrowing costs limit what buyers can afford, especially in more expensive areas. As costs of servicing mortgages rise, the pool of buyers shrinks, particularly amongst first-time buyers.

When rates increase (or remain sticky), upward pressure on prices is harder to sustain.

2. Tax changes, stamp duty, and policy uncertainty

Policy signals around property taxation influence buyer and seller behaviour.

• A stamp duty increase in April 2025 altered incentives for many buyers near thresholds, which contributed to some market distortions.

• Rumours of further property tax reforms (e.g. new taxes on homes over certain values, changes to capital gains tax rules) are feeding caution among buyers at the upper end.

• Sellers in some areas may be reluctant to reduce prices too early in hopes that policy changes favouring them will arrive, which can delay market adjustment.

  
  

3. Weakening buyer sentiment and uncertainty

Economic uncertainty, inflationary pressures, and concerns about the wider economy dampen buyer confidence. Many buyers may adopt a “wait and see” stance rather than commit at what they fear may later be overvalued levels.

In surveys, agent and buyer sentiment has softened, particularly in premium and higher-risk markets.

4. Rising supply (or slower demand)

• In some regions, more properties are entering the market, giving buyers more choice and increasing downward pressure on asking prices.

• Because many prospective buyers have already purchased or delayed, the marginal demand pool is less robust than in boom conditions.

• Also, new construction or plans for housing supply increases could, over time, moderate price escalations.

  
  

5. Time lags and downward momentum

Home sales are relatively infrequent and have long decision cycles, price declines tend to be smoothed. Sellers may initially resist reducing prices, and transaction data lag asking price changes. However, if downward momentum builds (e.g. more price cuts, longer times on market), actual sale prices may gradually follow.

House Prices

So: Are house prices falling?

Overall, the evidence suggests:

• No, house prices are not broadly falling across the UK yet. Most measures still show positive growth, albeit weakened.

• Yes (in places and slices): there are signs of mild falls or soft patches in specific months, especially via asking price cuts, and in pricier geographies or certain property types.

• The risk of outright declines is rising, especially if adverse shocks hit (e.g. interest rate hikes, economic slowdown, policy missteps).

  
  

In other words, the market is in a transition phase: from strong growth to more muted growth, and possibly toward gentle declines in vulnerable segments.

What to watch: Indicators for a turning point

If one wants to assess whether house prices are about to fall more broadly, here are some leading indicators to monitor:

1. Increasing frequency and magnitude of asking price cuts: A rising share of properties being reduced signals sellers are reacting to weaker demand.

2. Longer time on market / slower sales pace: If homes linger unsold for longer, downward pressure is likely to intensify.

3. Monthly declines in transaction indices: When major indices (Nationwide, Halifax, etc.) report sustained month-on-month falls, it may presage more general decline.

4. Credit conditions & mortgage availability: If banks tighten lending or raise mortgage rates further, demand will contract.

5. Negative sentiment or downward forecast revisions by major forecasters: If large property consultancies or economists begin forecasting outright falls, that can feed into market expectations.

6. Regional “hot spots” rolling over: Monitor high-growth areas (often in the north or more affordable regions) if those slow, the wider market often follows.

   
   

Forecasting precisely is fraught, but a few plausible scenarios can be sketched:

• Soft landing / mild declines: Modest falls (1–3 %) in weaker regions or higher-end markets over the next 1–2 years, while core markets hold up or see flat to slightly positive movement.

• Extended stagnation: Stagnation in many markets (0 % to –1 % net change) as affordability constraints dominate, with occasional pockets of stronger performance in lower-priced or high-demand locales.

• Downturn in response to shock: a macro shock (e.g. sharp rate hike, recession, policy misstep) could trigger more pronounced falls in many areas — though this is not currently the base expectation from most forecasters.

Indeed, many expert forecasts for 2025 expect only modest growth (1–4 %) rather than steep declines. HomeOwners Alliance Consultancies such as Savills maintain cautious optimism in mainstream markets, though acknowledging downside risks.

So, are house prices falling in the UK? Not broadly... yet. The momentum of growth has slowed, cracks are appearing (especially in asking prices and premium segments), and risks to price stability are rising. For now, most regions still show modest positive growth, and only specific areas or property types are likely to see downward pressure.

Over the next 12–24 months, the balance of forces (interest rates, affordability, supply, sentiment) will determine whether the market moves toward gentle decline or muddles along. For buyers, sellers, and policymakers, this is a period to watch carefully.