Rental inflation cools slightly but remains high amid continued demand
UK house prices continued their upward trajectory in March, according to new data from the Office for National Statistics (ONS).
The average house price in the UK rose by 6.4% year-on-year to reach £271,000, marking a further acceleration from the 5.5% increase recorded in February.
The rise comes after a period of declining growth, with annual house price inflation having bottomed out at -2.7% in December 2023. Since then, the trend has steadily reversed.
In England, the average house price climbed to £296,000 in March, representing a 6.7% annual increase — up from 5.4% the previous month, according to the latest ONS Private Rent and House Price data. Scotland saw prices rise by 4.6% to £186,000, down from February’s 5.3% growth.
Wales experienced a more modest increase, with the average price up 3.6% to £208,000, compared to 4.2% in the prior month. Northern Ireland recorded the strongest growth among the nations, with house prices up 9.5% to £185,000 in the first quarter of 2025, compared with Q1 2024.
Average UK house prices increased by 6.4%, to £271,000 in the year to March 2025, up from 5.5% in the 12 months to February 2025.
— Office for National Statistics (ONS) (@ONS) May 21, 2025
Average UK private rents increased by 7.4% in the year to April 2025, this is down from 7.7% in March 2025.
➡️ https://t.co/9bzGCzHKPV pic.twitter.com/HWFwf8Ss3w
“House prices rose in March, likely motivated by first-time buyers trying to complete purchases ahead of the stamp duty deadline,” said Emma Cox (pictured left), managing director of real estate at Shawbrook. “This was supported by interest rates recording a reduction in February, giving rise to the view that rates will continue to fall this year, albeit slowly.
“The question now is whether this level of activity will be sustained over the coming months. While spring and summer are generally strong seasons for the housing market, wider economic concerns may give buyers cause to pause on transactions until market conditions improve. With this in mind, property investors should use this opportunity to consider reviewing their portfolio to ensure they are diversified enough.”
Darrell Walker (pictured centre), group sales director at Chetwood Bank for ModaMortgages and CHL Mortgages for Intermediaries, noted the timing of the ONS data, pointing out that it was collected in the final run-up to the implementation of the new stamp duty changes.
“At that time, there were concerns that the surge in activity was temporary and that the market might revert to low levels of activity and growth,” Walker said. “However, since then, the Bank of England has cut rates again, and average mortgage rates now sit a full percentage point below where they were this time last year.
“These developments should mean that the activity before the stamp duty changes was not a one-off anomaly. Investors are continuing to find ways to execute their plans, and we are experiencing high demand, even in the face of higher stamp duty costs.”
Rental market growth slows slightly
The ONS also reported that average UK private rents rose by 7.4% in the year to April 2025, reaching £1,335 per month. This was a slight dip from the 7.7% annual increase seen in March.
In England, average monthly rents increased to £1,390, up 7.5%. Wales saw the sharpest rise, with rents up 8.7% to £795. Scottish tenants paid an average of £999, reflecting a 5.1% annual rise. Rents in Northern Ireland reached £843 in the 12 months to February 2025, a 7.8% increase over the same period a year earlier.
Among English regions, the North East posted the highest rental inflation at 9.4%, while Yorkshire and The Humber recorded the lowest at 4%.
“Rents continue to rise, and the reason why is clear,” said Alex Upton, managing director of specialist mortgages and bridging at Hampshire Trust Bank. “We still do not have enough homes to meet demand. Propertymark data shows an increase in available stock, but it is not enough to keep pace with tenant enquiries. That level of competition means pricing pressure remains firmly upward.
“There is a risk that the imbalance becomes even more severe in the months ahead. The Renters’ Rights Bill may prove to be the final straw for some smaller landlords, particularly those for whom property is not a full-time focus.”
Upton, however, said that despite the uncertainty, more investors are rebalancing their portfolios, focusing on properties that can deliver strong tenant appeal and long-term performance in a changing regulatory landscape.
“Brokers and lenders both have a role to play in supporting that shift,” she stressed. “Landlords need access to funding that is flexible and commercially fair, with structures that allow them to transition out of underperforming assets without being penalised by restrictive terms or excessive exit charges. The market is evolving, and landlords will need the right support to adapt.”
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