You’re witnessing the UK housing market‘s strongest performance in four years, with May 2025 sales surging 6% compared to the previous year. Northern regions lead this rebound, particularly Scotland and northern England, where the North East recorded 14.3% annual house price growth through March 2025. Changes in affordability testing now allow you to borrow up to 20% more than before, while lower mortgage rates since 2024 have boosted demand and market confidence throughout these recovering territories.
While southern regions grapple with affordability constraints, the UK housing market has demonstrated remarkable resilience with sales climbing 6% higher in May 2025 compared to the previous year. This growth represents a considerable rebound that’s breaking four-year market trends across multiple regions.
You’ll find the strongest momentum in northern territories, where Scotland and northern England are experiencing the fastest growth in agreed sales. The North East leads with exceptional annual house price growth of 14.3% for the year ending March 2025, while the North West and East Midlands also record substantial increases.
Market confidence has improved dramatically due to changes in affordability testing that now allow you to borrow up to 20% more than previously possible. These regulatory adjustments, combined with lower mortgage rates since 2024, have boosted demand and sales activity throughout the market.
Regulatory changes enabling 20% higher borrowing limits and reduced mortgage rates have dramatically strengthened market confidence and buyer demand.
UK house prices rose 6.4% annually through March 2025, up from 5.5% the previous month. Monthly increases reached 1.1% between February and March 2025 on a non-seasonally adjusted basis, with Yorkshire and Humber showing particularly considerable gains.
Regional disparities remain evident as southern England faces slower growth due to persistent affordability challenges. Conversely, the West Midlands experienced declining sales compared to the previous year, highlighting how market conditions vary considerably across different areas.
Areas with more affordable housing continue driving faster sales growth, demonstrating affordability’s ongoing influence on market activity. The estimated number of residential transactions in March 2025 was considerably higher than the same period last year. The average estate agent now has 35 unsold homes on their books, representing a 13% increase in available inventory compared to the previous year.
Industry forecasts project the UK housing market will achieve a 5% increase in sales for 2025 compared to the previous year. Nationwide predicts house price growth will range between 2% and 4% for 2025, despite continuing affordability constraints in certain regions. This outlook reflects expectations that earnings growth will outpace house price increases, gradually improving market accessibility.
This market resilience reflects improved borrowing conditions and renewed buyer confidence. The combination of better mortgage accessibility and regional variations in affordability has created a dynamic market environment where northern regions thrive while southern areas face ongoing challenges.
Frequently Asked Questions
What Factors Are Driving Buyers to Make Decisions Now Despite Economic Uncertainty?
You’re making housing decisions now because falling mortgage rates have dropped to 3.72%, making borrowing markedly cheaper than last year’s 4.75%.
You’re also rushing to secure properties before anticipated Bank Rate cuts drive prices higher, while abundant inventory gives you more choice than seen in a decade.
Despite economic uncertainty, you’re viewing property as a long-term investment and acting quickly to avoid future price increases in this competitive market.
How Are Rising Interest Rates Affecting Mortgage Affordability for First-Time Buyers?
Rising interest rates directly increase your monthly mortgage payments, making homeownership less affordable as a first-time buyer.
You’ll face stricter affordability tests requiring lenders to verify you can handle payments if rates rise by 3%.
However, you can access government schemes like Help to Buy and Shared Ownership to reduce upfront costs.
Some lenders now offer extended repayment terms and lower deposit requirements to help offset higher borrowing costs.
Which Regions Are Experiencing the Strongest Price Growth and Demand Increases?
You’ll find the strongest price growth in northern England, where the North East leads with 14.3% annual increases.
Yorkshire and the Humber follows at 9.5%, while the North West shows 9.4% growth.
These regions also dominate monthly gains, with the North East up 4.2% and North West rising 2.5%.
London shows the weakest performance with just 0.8% annual growth and a -0.3% monthly decline, despite remaining England’s most expensive market.
Are Property Investors or Owner-Occupiers Primarily Responsible for the Sales Surge?
You can’t determine whether property investors or owner-occupiers are primarily driving the sales surge, as specific data distinguishing between these buyer groups isn’t available in current market reports.
However, you’ll find that changes in affordability testing now allow potential buyers to borrow more, which affects both groups.
The sales increase likely results from combined factors influencing all buyers, including Stamp Duty changes and improved mortgage conditions.
Will This Trend Continue Through Summer or Is It Seasonal Momentum?
You’ll likely see continued growth through summer, though it’s driven by both seasonal momentum and fundamental market improvements.
The 6% sales increase reflects genuine market confidence and improved borrowing capacity, merely seasonal patterns.
However, you should expect challenges ahead.
Affordability constraints in southern England and potential interest rate changes could slow momentum.
Limited inventory from faster sales growth may also restrict summer activity unless more properties enter the market.
