Rents in the UK continued their upward trajectory in January 2025, rising by 8.7% compared to the same time last year, according to provisional data from the Office for National Statistics (ONS).
While this marks a slight slowdown from December’s 9.0% increase and is below the record-high 9.2% seen in March 2024, rents remain significantly higher than a year ago. The average private rent in Great Britain reached £1,332 per month in January, which is £106 more than the £1,226 recorded in January 2024.
Despite this moderation in the rate of increase, rents are still climbing steadily, reflecting ongoing affordability challenges in the private rental sector.
Alongside rising rents, house prices also continued to climb, with the average UK house price reaching £268,000 in December 2024 – up 4.6% from the previous year.
MARKET RECOVERY
This represents a further recovery from the downturn in late 2023 when house prices were in negative territory with a 2.7% annual decrease.

Nathan Emerson, Chief Executive of Propertymark, says: “Increases in rental prices across the UK have been an ongoing concern and our member agents continue to emphasise key issues regarding the continuous trend of lack of rental stock versus an ever-growing number of tenants looking for homes.
“Selling up altogether or turning to the short-term letting market is becoming a more attractive option for landlords due to the challenging legislative changes and increased financial liabilities they face.
“It’s crucial that a healthy mix of homes of all types and tenures is encouraged throughout the entire UK. Governments across all nations have made various pledges regarding housing building targets, however, a crucial factor to ensure is that good landlords providing secure and decent homes to the nation are supported and not penalised.”
HOUSE PRICES
The ONS has also updated its UK House Price Index (HPI), which now uses January 2023 as the reference period rather than January 2015.
This revision reflects changes in the housing market, including a decrease in the average size of properties sold and an increasing number of transactions in more affordable areas, leading to a 7.9% downward revision to the “average” UK property price series.
Regional variations in house prices have been notable, with growth differing across the UK.
In England, the average house price stood at £291,000 in December 2024, up 4.3% from the previous year, an acceleration from November’s 3.4% increase.
Wales saw prices rise by 3.0%, reaching an average of £208,000, though this was a slowdown from the 3.7% increase in November.
In Scotland, prices climbed by 6.9%, pushing the average price to £189,000, while in Northern Ireland, house prices surged by 9.0%, reaching £183,000.
The housing market has remained dynamic in many areas, with the North East of England recording the highest house price inflation of 6.7% year-on-year in December 2024, slightly higher than November’s 6.4% rise.
LONDON SLOWDOWN
However, the situation in London was markedly different as house prices stagnated, recording 0.0% growth in December.
This represents a significant slowdown from November, when the capital saw a 0.5% rise. London’s stagnation highlights the ongoing affordability pressures in the capital, where house prices remain the highest in the UK.
Looking ahead, while both house prices and rents continue to rise, the pace of rental growth appears to be slowing.
As affordability challenges persist, especially with rising mortgage rates and policy changes, the housing market’s trajectory in 2025 remains uncertain.
Regional disparities in price growth, however, suggest that demand and market conditions will remain highly localized, with some areas continuing to experience stronger price inflation than others.
ONGOING CONCERN
Emerson adds: “Increases in rental prices across the UK have been an ongoing concern and our member agents continue to emphasise key issues regarding the continuous trend of lack of rental stock versus an ever-growing number of tenants looking for homes.
“Selling up altogether or turning to the short-term letting market is becoming a more attractive option for landlords due to the challenging legislative changes and increased financial liabilities they face.
“It’s crucial that a healthy mix of homes of all types and tenures is encouraged throughout the entire UK. Governments across all nations have made various pledges regarding housing building targets, however, a crucial factor to ensure is that good landlords providing secure and decent homes to the nation are supported and not penalised.”
GROWTH IN CHECK

Gareth Samples, Chief Executive of The Property Franchise Group, says: “While buyer demand and sales activity are up compared to last year, price growth is expected to remain in check throughout 2025.
“This is partly due to the increased number of available properties, as well as the higher Stamp Duty on homes following the April deadline.
“The good news is that we have seen the first Bank Rate cut of the year, with a few more expected in the coming months. The market response has been positive, and as rates continue to gradually decline, we hope to see growing confidence among buyers.
“Moving activity remains strong, and consumer appetite for relocation over the next two years is increasing – an encouraging sign for market activity throughout the remainder of 2025. Around 22% of renters and just under a fifth of homeowners plan to move within this period.”
KNOCK-ON EFFECT

Jason Tebb, President of OnTheMarket, says: “Two interest rate cuts in the latter half of last year and one this month have had a positive knock-on effect on confidence, which the market relies so heavily on.
“With inflation rising unexpectedly to 3 per cent, the next rate reduction may be pushed back a little as the Bank of England keeps a close eye on inflationary pressures in coming months.
“Affordability remains a challenge but with a number of lenders reducing their mortgage pricing in recent days on the back of lower Swap rates, this may continue to ease if other lenders follow suit. As always, sellers coming to market would be wise to take advice from their local agent and price accordingly.”
COST OF BORROWING

Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: “Stubborn inflation continues to weigh on household budgets, and with the cost of borrowing still relatively high, potential buyers may sit on the fence until this changes.
“That said, we saw more applicants in January than in the final quarter of last year, some of whom have found themselves in a position to buy because a first-time buyer has completed their chain. This leads me to have some concerns about the second quarter of this year after the stamp duty holiday has ended.
“It has felt as though the market has been holding its breath, awaiting clarity on inflation figures and the Bank of England’s stance on interest rates. With the UK economy in a fragile state, we don’t anticipate further drops in base rate in the first half of the year – if anything, we could see fixed mortgage rates edge higher, which will have a negative bearing on activity.”
MARKET HEALTH

Verona Frankish, Chief Executive of Yopa, says: “We saw a second consecutive reduction in the monthly rate of house price growth during December, but this is to be expected given the seasonal slowdown that comes due to the Christmas break.
“The real indicator of market health is the annual rate of growth and, with house prices increasing by 4.6% over the course of last year, the market has performed very well indeed.
“This is despite the fact that the nation’s buyers are continuing to contend with far higher borrowing costs than they’ve become accustomed to in recent years. However, we’ve already seen one interest rate reduction so far in 2025 and it’s shaping up to be a year of even greater positivity where the property market is concerned.”
POSITIVE MOMENTUM

Marc von Grundherr, Director of Benham and Reeves, says: “The UK property market has demonstrated a great deal of resilience, with the market moving forward at pace in 2024, despite the wider economic uncertainty that engulfed much of last year.
“In London, house price growth remained static on an annual basis following a year of greater stagnation due to higher borrowing costs and higher house prices.
“However, the general consensus is that we’ve very much turned a corner now and 2025 is set to be a year of positive momentum across the capital’s property market.”
IMPROVING CONDITIONS

Jonathan Handford, Managing Director at national estate agent group Fine & Country, says: “The surge in house prices can be linked to policy changes announced in the Autumn Budget, particularly the adjustments to stamp duty thresholds.
“With the lower threshold for first-time buyers set to drop from £425,000 to £300,000, many have been motivated to fast-track their purchases before the April 1 deadline to avoid increased upfront costs.
“This urgency may lead to a natural cooling-off period in the market post-deadline, though early 2025 has already seen encouraging economic signals. The Bank of England’s third consecutive base rate cut is expected to further ease borrowing costs, making mortgages more affordable and supporting buyer confidence.
“However, reports yesterday show January’s CPI inflation rose to 3% – reaching a 10 month high – after falling to 2.5% in December, raising concerns about price stability. If inflation continues to climb, the Bank of England may take a more cautious approach, potentially delaying further rate cuts this year. For buyers, this adds uncertainty, as higher inflation could keep borrowing costs elevated for longer.
“Those unable to complete purchases before the stamp duty changes may shift focus to broader economic policies, closely watching inflation and interest rate decisions before committing.
“Looking ahead, the key question remains whether the economy can sustain this positive trajectory. While further rate cuts could stimulate the market, much will depend on the government’s ability to manage inflation effectively. If stability continues, we may see a more balanced housing market emerge, with steady demand supported by improving financial conditions rather than short-term policy-driven urgency.”
HIGHER STAMP DUTY

Richard Donnell, Executive Director at Zoopla, says: “We expect the rate of growth in the ONS index to slow over 2025 due to much greater choice of homes for sale, up 11% on last year and higher stamp duty costs for most buyers from April.
“While the rate of inflation has increased, we don’t expect much change in average mortgage rates. Additionally, it’s positive that average earnings continue to rise faster than house prices, helping to reset housing affordability and improve access to the market.
“The rental market continues to be stuck in a supply/demand imbalance which is keeping an upward pressure on rents. The pace at which rents rise across all existing rented homes is slower and reflected in the ONS index which shows how rents are re-aligning across the wider market. Once this has worked through the market the ONS will also register slower rent inflation.”
RUSH TO COMPLETE

Iain McKenzie, Chief Executive of The Guild of Property Professionals, says: “Property prices have been bolstered by the rush to complete before the Stamp Duty changes come into effect. However, as many realise that their transactions will not make it across the line before the looming deadline, some wind has been taken out of the sails.
“Perhaps spurred on by the rush of buyer activity created by the stamp duty deadline, many sellers have placed their properties on the market at the beginning of the year. Currently the number of properties available are at the highest they have been in a decade. Compared to this time last year, there are 13% more new sellers coming to market.
“With more available choice and moderating prices, it would seem that buyers are in the driving seat. However, the recent base rate reduction, coupled with further expected declines this year, has driven buyer demand higher than this time last year, along with an increase in agreed sales. Thus, helping maintain a healthy balance in pricing. While a slight adjustment may occur after April, no significant drop-in market activity is expected.”