The UK housing market has posted a mixed performance over the past year, reflecting regional disparities, policy impacts, and ongoing shifts in demand and construction activity. According to the UK House Price Index, average house prices rose by 2.6% between September 2024 and September 2025. On a seasonally adjusted monthly basis, however, prices edged down 0.3% from August to September 2025, signaling modest short-term cooling.
Regional variations remain pronounced. House prices increased fastest in Northern Ireland, Scotland, and Yorkshire & the Humber over the year, although Northern Ireland figures are measured to the third quarter of 2025. In contrast, London experienced a decline in house prices, highlighting the continued pressure on the capital’s market due to affordability constraints and shifting demand patterns.
Mortgage approvals, a key leading indicator of housing activity, show a steady but subdued trend. In September 2025, there were 65,944 mortgage approvals for house purchases, broadly unchanged from 65,628 in the same month last year and up 2% from August 2025. While approvals surged toward the end of 2020 after the lockdown lows of May that year, they remain below pre-pandemic levels, reflecting cautious lending and buyer sentiment.
The construction side of the market presents another nuanced picture. Housing starts and completions, which had fallen sharply during the Covid-19 lockdown, have gradually recovered, though levels remain below their 2023 peaks. In England, Q2 2025 saw 29,490 house building starts, a 2% increase over the previous quarter and a 16% rise compared with the same period in 2024. Meanwhile, completions in Q2 2025 totaled 34,990, down 2% from the previous quarter and 19% lower year-on-year.
The fluctuation in starts can be partly attributed to regulatory changes. Q2 2023 saw a surge to 68,350 housing starts as builders accelerated projects ahead of new energy performance standards and electric vehicle charging requirements, introduced on June 15, 2023. This “pull-forward” effect temporarily boosted starts, leaving subsequent quarters with comparatively lower activity.
Analysts note that the mixed signals—moderate price growth nationally, strong regional performance in some areas, and uneven construction activity—reflect both the market adjusting to new regulations and ongoing challenges in affordability, supply constraints, and lending conditions. Mortgage approvals remain steady but do not indicate a rapid surge in buying activity, suggesting that while demand exists, financial and regulatory factors continue to moderate transactions.
Looking ahead, the market is likely to continue navigating these mixed dynamics. Prices may stabilize in the near term, particularly in London and other high-cost regions, while construction activity adjusts to meet new standards and regulatory expectations. Mortgage lending will remain an important barometer, signaling the balance between buyer confidence and the impact of financial and policy constraints.
As the UK housing sector adapts to these evolving conditions, regional differences, policy implementation, and supply-demand imbalances will continue to shape market trajectories in the months ahead.
Source: House of Commons Library
