UK Housing Demand Rises Amid Market Challenges

As the UK housing demand strengthens, many urban centres are witnessing a notable resurgence amid the market’s ongoing recovery. Despite lingering uncertainty in some areas, a combination of falling mortgage rates and renewed consumer confidence has injected fresh energy into the housing sector.

Regional Momentum Gathers Pace

Cities such as Newport, Leicester, and Liverpool have witnessed some of the strongest year-on-year growth in buyer demand, according to recent data from eXp UK. These locations saw a surge in market activity ranging from 4% to 6%. Consequently, they attracted renewed interest from buyers and investors.

Across a broader spectrum, 14 of the 25 largest cities in the UK recorded a higher level of demand compared with the previous year. Cities such as Birmingham, Swansea, and Edinburgh saw marked improvements. Moreover, momentum appears to be spreading beyond traditional hotspots.

London, however, appears to be lagging. The capital’s premium pricing combined with waning interest from international buyers has created a more stagnant picture, with activity levels largely unchanged since last year.

Market Confidence Rebounds: UK Housing Demand

The start of 2025 has brought with it renewed optimism, contrasting sharply with the more subdued performance of early 2024. One key turning point has been the conclusion of the temporary stamp duty relief scheme in April, which prompted a rush of transactions as buyers moved quickly to take advantage of favourable tax conditions.

Despite this incentive ending, industry insiders suggest the upward trend in transactions is likely to persist. Adam Day of eXp UK noted that “buyers remain active, and we’re seeing upward trends in mortgage approvals, property enquiries, and overall house price growth. The market is gradually building up speed.”

Strong Price Growth in Northern England

Recent statistics from HM Land Registry illustrate the scale of price increases, with UK-wide property values rising by 6.4% in the year to March 2025 – the highest annual increase since December 2022. In England, northern regions led the charge as the North East recorded a 14.3% rise in prices. Additionally, Yorkshire and the Humber saw a 9.5% increase, with the North West close behind at 9.4%.

While the end of stamp duty incentives no doubt played a role in short-term surges, the broader improvement in mortgage product availability and more competitive rates have played a sustained part in bringing buyers back to the table.

Market Outlook: Steady but Cautious

Nick Leeming, chairman of national estate agency network Jackson-Stops, commented on the robust early-year performance. He noted that March saw a flurry of buyer activity ahead of the stamp duty deadline, which helped push up prices. However, he warned that this pace may moderate as the urgency recedes.

“Regional variations will continue to define market behaviour,” Leeming explained. “We expect growth to be more measured in the coming months. However, demand is currently outstripping supply in several key markets. In April, we saw five prospective buyers competing for every newly listed property.”

This ongoing supply-demand imbalance suggests that price rises may level out. However, market activity could stay strong if conditions remain stable.

A Nuanced Landscape: UK Housing Demand

Not everyone sees unrestrained growth ahead. Iain McKenzie, CEO of The Guild of Property Professionals, described the UK housing market as inherently “complex”. He stressed that various factors, such as inflation and interest rate shifts, will likely temper growth. Moreover, fiscal policies may introduce more regional variation.

“With stock levels reaching a ten-year high, it’s increasingly important for sellers to price their homes sensibly,” McKenzie said. “Buyers are active, but they’re also more selective. Standing out in a competitive market requires strategic pricing and presentation.”

This need for realism is likely to define the coming months, as buyers become more cautious in their decision-making and sellers face greater competition.

Rental Sector Sees Accelerated Growth

While the sales market grapples with moderation, the UK rental sector remains under intense pressure. Average rents have risen by 7.4% in the past year – a slight dip from the 7.7% annual growth seen previously, but still a strong performance in historical terms.

Nathan Emerson, CEO of Propertymark, highlighted the ongoing challenges in the lettings market. “Demand continues to far outstrip supply, with around ten applicants chasing each available rental property. This imbalance has been consistent for several years now, keeping upward pressure on prices.”

The rental sector’s resilience underlines the continued demand for housing across the board, whether through ownership or tenancy. However, without a significant boost in new housing supply, affordability will remain a pressing concern.

Final Thoughts: UK Housing Demand

The UK housing market is currently in a state of cautious optimism. Regional cities are showing promising signs of revival, particularly in the North and Midlands, while London faces a more subdued trajectory. Though incentives such as stamp duty relief have boosted activity, broader economic forces will ultimately determine the pace and direction of future growth.

With mortgage rates improving and confidence slowly returning, the coming months could prove pivotal. Yet, the balance between supply and demand – alongside buyer affordability and pricing realism – will continue to shape outcomes across the housing landscape. Whether this translates into sustained growth or a more tempered expansion remains to be seen.