The UK housing market continued its steady recovery in October, with new figures showing that average property values have reached their highest level on record. With the Autumn Budget approaching, the latest data suggests a market that is stabilising after a turbulent two years — though affordability pressures remain firmly in play.
How strongly did prices rise in October?
The latest monthly figures show a 0.6% increase in average UK house prices, reversing a 0.3% decline recorded in September. This is the fastest monthly rise since the start of the year and pushes the average home to £299,862, the highest level ever recorded by Halifax’s index.
On an annual basis, prices are now 1.9% higher than a year ago, up from 1.3% the previous month. Although this rate of growth is modest compared to the rapid rises seen earlier in the decade, it marks a turning point after a period of stagnation.
Mortgage approvals have also risen to their highest level so far in 2025, indicating renewed confidence from buyers. Activity has been stronger than expected for the time of year, hinting that many households are pressing ahead with moves despite lingering economic uncertainty.
Is affordability still restricting the market?
Yes — affordability remains the tightest constraint on the market.
Mortgage rates have eased slightly in recent weeks, with many lenders reducing fixed-rate deals, yet the average fixed rate still sits around 4%. Combined with record-high house prices, this means monthly payments remain challenging for many would-be buyers.
Households are also navigating elevated living costs, leaving less room in monthly budgets to stretch for larger loans. The result is a market where demand is present and visible — but still limited by borrowers’ financial capacity.
Could mortgage rates fall further soon?
The interest rate outlook has shifted notably. The Bank of England recently kept the Bank Rate at 4%, but the decision was narrow, with a sizeable minority of policymakers favouring a cut to 3.75%. This is the strongest signal this year that rate reductions may be approaching.
Market analysts now expect the first cut either at the December meeting or in early 2026.
Lenders appear to be anticipating this direction of travel. Several have already trimmed rates in advance, and more reductions could filter into the market as expectations of lower borrowing costs strengthen.
For borrowers approaching the end of a fixed deal, this creates an increasingly favourable environment, with the potential for better pricing during the winter and into early next year.
Which regions are growing the fastest?
The national picture hides significant regional differences. Some parts of the UK are recording healthy annual rises, while others are seeing little movement or small declines.
Northern Ireland – The standout performer
Annual growth: 8%
Average price: £219,646
Northern Ireland continues to lead the UK, posting the strongest annual growth for another consecutive month. Momentum in this region has been steady throughout 2025, supported by comparatively affordable prices and stable local demand.
Scotland – Solid upward trend
Annual growth: 4.4%
Average price: £216,051
Scotland’s market remains resilient, with annual growth above the UK average and broad-based increases across many local authorities.
Wales – Moderate but positive
Annual growth: 2.0%
Average price: £229,558
The Welsh market has cooled from the rapid pandemic-era increases but continues to edge upward.
England – A split market
The picture in England is highly varied:
North East:
Annual growth: 4.1%
Average price: £180,924
The region remains one of the most affordable in the UK and continues to attract buyers priced out of areas further south.
London:
Annual change: -0.3%
Average price: £542,273
Despite the high price point, the capital is one of the few areas posting an annual decline, reflecting stretched affordability and softer demand at the top end of the market.
South East:
Annual change: -0.1%
This small fall underlines the affordability ceiling facing buyers in higher-value regions.
The pattern is clear: lower-priced areas are outperforming, while regions with the steepest house-price-to-income ratios are seeing flat or falling values.
Are confidence levels rising among buyers and sellers?
Overall, confidence appears to be improving. Steady demand, increasing mortgage approvals, and early signs of rate stability have all contributed to a more settled market environment as the year closes.
The broader economic backdrop — including falling inflation and a slowing pace of interest-rate rises — has also supported sentiment. Many households seem to believe that the most volatile period for mortgage rates is behind them.
Developments in housing policy are also feeding into the outlook. Progress toward the Government’s target of building 1.5 million new homes in England is seen as a potentially significant long-term shift for supply and affordability, though timelines and practical delivery remain uncertain.
Could the Autumn Budget disrupt the market?
The Autumn Budget on 26 November is expected to be a major moment for the property sector. Several areas remain under close watch:
Stamp duty thresholds
Possible incentives for downsizers or first-time buyers
Housing supply commitments
Planning system reforms
Support for new-build purchasers
Potential adjustments affecting landlords and the rental market
Uncertainty around these policies has already caused some buyers and sellers to delay decisions. Any substantial reforms — particularly to stamp duty — could reshape activity levels quickly.
The Budget could therefore either reinforce the current stabilisation or introduce new shifts that change the direction of the market heading into 2026.
How should buyers approach the market now?
Buyers navigating today’s conditions should consider the following:
Rates may fall further, but current pricing is already more favourable than earlier in the year.
Property supply has improved, reducing the competitive pressure seen in 2021–2022.
Regional differences matter more than ever — value is stronger in northern regions and devolved nations.
A mortgage agreement in principle is essential, particularly if Budget changes trigger a rush of activity.
For first-time buyers, stable pricing and the prospect of lower mortgage costs make the winter period a potentially strategic moment to enter the market.
What about sellers?
For sellers, October’s data provides encouragement:
Prices are at their highest ever level.
Mortgage approvals are rising.
Buyer enquiries have improved compared to the summer.
However, caution is still warranted. While activity is stronger, buyers remain price-sensitive. Overambitious asking prices may slow down the process.
Sellers planning to list before the New Year may want to do so before any Budget-related market pauses emerge.
What’s the likely direction of travel for early 2026?
Most indicators point toward a more predictable, more stable housing market in early 2026. Expectations of falling mortgage rates, coupled with steady demand, could help support modest price growth.
However, affordability will remain the key limiting factor, and any shifts in government policy could significantly influence activity.
For now, the October data reinforces the view that the market has moved away from the volatility of recent years and into a calmer phase — one that may continue through winter unless disrupted by economic or policy surprises.
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Disclaimer:
This article is for general guidance purposes only and does not constitute legal, financial, or professional advice. Mortgage products and their terms can vary, and it is important to seek advice from a qualified, regulated professional who can assess your individual circumstances. Please ensure you consider your unique needs before making any financial decisions.
While every effort is made to ensure that the information provided on this blog is accurate and up-to-date, we do not guarantee its completeness or accuracy. The mortgage market can change rapidly, and the information on this blog may become outdated. We recommend verifying any information before acting on it and seeking tailored advice.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
