The Halifax House Price Index rose by 3.2% year-on-year in April 2025, accelerating from a revised 2.9% increase in March and surpassing market expectations for a 2.6% rise.
UK house price growth surpasses expectations
This marked the fastest annual growth rate so far this year, underscoring the resilience of the UK housing market despite broader economic headwinds. On a monthly basis, prices edged up 0.3%, rebounding from a 0.5% decline in March and defying consensus forecasts for a slight contraction of 0.1%. Nonetheless, the quarterly change in prices slipped by 0.1%, signaling continued near-term volatility and a cautious market mood.
The average house price in the UK climbed to £297,781 in April, up from £296,899 the previous month. While prices remain well below their peak from mid-2022, the current levels reflect a surprisingly robust recovery in sentiment, particularly in southern England and major urban centers such as Manchester and Birmingham, where demand has been supported by a combination of limited supply and improving affordability.
Halifax expert comment
Amanda Bryden, Head of Mortgages at Halifax, emphasized that the housing market has demonstrated "remarkable price stability" over the past six months, despite macroeconomic challenges including high inflation, subdued growth, and global geopolitical uncertainty. A key driver behind the steady demand is improved mortgage affordability, with average borrowing rates falling below 4% following a period of elevated interest costs. Meanwhile, wage growth has continued to outpace inflation in many sectors, supporting buyer purchasing power and enabling more households to re-enter the market.
First-time buyers have also contributed to the price momentum, encouraged by falling fixed-rate mortgage offers and a competitive lending environment. However, transaction volumes remain below pre-pandemic levels, suggesting that affordability constraints and cautious consumer sentiment are still weighing on overall activity. Regional disparities persist, with London and the South East showing slower annual gains compared to the Midlands and parts of Northern England.
Looking forward, modest price growth is expected to persist for the remainder of 2025, supported by the prospect of interest rate cuts from the Bank of England and a potential improvement in economic sentiment should trade tensions and fiscal policy risks ease. Nevertheless, downside risks remain, particularly if unemployment begins to rise or if inflation proves more persistent than expected, prompting tighter monetary conditions.
