The UK housing market is entering a more price-sensitive phase as a growing supply of homes tempers house price inflation, with affordability and realism now key drivers of transaction activity.
According to the latest Zoopla House Price Index, annual UK house price growth slowed to 1.4% in May, down from 2% earlier this year.
The average home now stands at £268,400, just £3,960 higher than 12 months ago.
The data reveals a strong correlation between regional increases in housing stock and moderating price trends, with higher-value southern markets leading the slowdown.
Estate agents are now listing an average of 37 properties – up from 32 a year ago – which has supported a 6% year-on-year increase in sales agreed. In London, the South East and South West, supply is up by between 16% and 19%, and annual price growth has slipped below 0.5%.
Elsewhere, northern regions, the West Midlands and Scotland, where the rise in listings has been less pronounced, are recording price gains of 2% to 3%.
EVOLVING INTERPLAY
Zoopla’s Executive Director Richard Donnell said lenders and intermediaries should be alive to the evolving interplay between supply, price and borrower expectations.
He added: “The number of buyers and sellers agreeing home sales continues to increase year-on-year, demonstrating a continued desire of more households to move home in 2025. Improving mortgage affordability will support buying power in the second half of the year.
“However, buyers remain price-sensitive, especially in higher-value markets where the number of homes for sale has grown the most in the last year, boosting choice for home buyers. Serious sellers need to be realistic on where they set their asking price in order to achieve a sale and secure a home move in 2025.
The market remains on track for 5% more sales in 2025 but house price inflation will remain between 1% and 2%.”
AFFORDABILITY DICTATES MOMENTUM
Price corrections are most evident in areas where values exceed £500,000 — which represent around 8% of the market – with annual price falls of 0.2%. These are concentrated in inner London and parts of the South West, including notable year-on-year declines in West Central London (–4.3%), Torquay (–1.7%) and West London (–1.3%).
More affordable markets are seeing stronger growth. Prices are up 2.7% in areas with average values below £200,000 and 1.9% in the £200,000–£250,000 band. These segments account for around half of all UK housing stock. The strongest price growth is currently seen in Wigan (+4.3%), Falkirk (+3.8%) and Blackburn (+3.6%).
These shifts are shaping borrower profiles and recalibrating affordability conversations. For lenders and advisers, the renewed price realism may support higher application volumes, particularly where mortgage rates and income multiples align with regional value thresholds.
LONGER TO SELL
Time to sell has held steady at 45 days on average, though this varies considerably by region – from 35 days in the North East to 57 days in Wales. In southern England, where buyer choice is higher, time to sell consistently exceeds 50 days.
More than one in five listings (22%) remain unsold after six months on the market, and a further 23% have been on for between three and six months. The average time on market for unsold stock is now 75 days — a clear sign of buyers pushing back on unrealistic valuations.
SHIFTING BUYER PSYCHOLOGY
Sarah Cartlidge, Branch Manager at Fraser Reeves in the North West, urged vendors to recognise shifting buyer psychology.
She said: “We’re delighted to be seeing increased vendor confidence this year, with more properties coming on to the market than in 2024. However, property price remains key to agreeing a sale.
“We’re always keen to emphasise to prospective vendors that they do need to price positively and realistically from the get-go, in order to secure a good buyer in good time, and to make the best first impression possible when their property hits the market.
“We know that any property can sell for the right price, taking into account the local competition and the particular characteristics of each individual home.”
GEOPOLITICAL RISKS FADING
Tom Bill, head of UK residential research at Knight Frank, added: “The current supply glut has put downwards pressure on asking prices, which sellers must take into account if they need to transact sooner rather than later.
“Geopolitical and tariff risks appear to be fading, which points to a smoother ride for the housing market in the second half of the year, which should be boosted by at least two rate cuts.
However, the government’s non-existent financial headroom means tax rise speculation is likely to intensify ahead of the autumn Budget in a re-run of last year.”
