December 2025 Market Reflections: What Property Investors Need to Know
At Dwelling & Manor, we are driven by a passion for staying ahead in the ever‑changing world of property. Our team distills the latest market trends, legislation, and industry developments into clear, accessible insights—ensuring you’re always informed without the jargon.
By delivering timely updates in an easy‑to‑read format, we empower our clients to make confident decisions and seize opportunities as they arise. This commitment to knowledge and clarity sets us apart from traditional estate agents, positioning us not just as property professionals dedicated to your success.
As 2025 draws to a close, the property market reminds us that even the most established landscapes are never static. What began as a year of cautious optimism—buoyed by steady rental demand — has ended with an unexpected twist: a late‑season dip in house prices and renewed scrutiny of landlord responsibilities. For investors and property managers, these developments are more than headlines; they are signals of deeper currents shaping the future of housing.
House Prices Take a Turn
Best performers: North East
Worst Performers: London & South East
The close of 2025 has brought a subtle but telling shift in the UK housing market. According to the latest Nationwide House Price Index, annual growth slowed to 1.8% in November, down from 2.4% in October, while average prices edged up just 0.3% month‑on‑month to £272,998. This moderation reflects a market that is resilient yet cautious, shaped by both economic uncertainty and evolving fiscal policy.
Regional Variations
London & the South East: Still commanding premium values, but the introduction of the new mansion tax on homes over £2 million has prompted some discretionary sellers to list early, increasing supply at the top end.
Midlands & North: Activity remains steady, with affordability slightly improving thanks to easing mortgage costs. Homes priced realistically continue to attract interest.
Scotland & Wales: More modest growth, with local demand balancing against broader economic anxieties.
House Price - 2025 YTD
🔺North West & North East +5%🔺
🔻Kensington & Chelsea -11.3%🔻
🔺South East & South West +0.9%🔺
🔺Yorkshire & Humber +4.5%🔺
🔻Westminster -14.4%🔻
🔺Scotland +5.3%🔺
🔻City of London −15.0%🔻
🔺Northern Ireland +7.1%🔺
🔻London Overall -1.8%🔻
🔺North West & North East +5%🔺 🔻Kensington & Chelsea -11.3%🔻 🔺South East & South West +0.9%🔺 🔺Yorkshire & Humber +4.5%🔺 🔻Westminster -14.4%🔻 🔺Scotland +5.3%🔺 🔻City of London −15.0%🔻 🔺Northern Ireland +7.1%🔺 🔻London Overall -1.8%🔻
Rental Prices in 2025: A Market Under Pressure
The UK rental market in 2025 has been defined by a sharp rise in costs, followed by signs of cooling later in the year. According to the Office for National Statistics, rents climbed 8.1% in the 12 months to March 2025, marking the fastest increase since records began. London led the surge, with average monthly rents hitting £2,235, while cities such as Manchester, Bristol, and Glasgow also saw strong growth driven by student demand, professional migration, and limited housing supply.
Secondary cities like Bradford and Liverpool became hotspots for investors, offering yields above 8%, highlighting the appeal of affordable buy-to-let markets. However, by mid-to-late 2025, growth slowed to around 2–3% annually, with regions such as Yorkshire & Humber and parts of Leeds showing modest declines as supply began to catch up with demand.
Our thoughts…
With a record low number of new homes expected to be completed in London over the next two years, we believe rents are set to soar in the capital as demand continues to outstrip supply
Rents Set to Soar in London - 2026-2027
At Dwelling & Manor, we believe the London rental market is entering a decisive phase. Demand for well‑managed properties—particularly modern, energy‑efficient units close to transport hubs—is expected to outpace supply for at least the next three years. This imbalance will drive rents upward, with competition especially fierce among young professionals and international students seeking compact, high‑quality living spaces.
London is moving toward a globally competitive rental structure, where smaller, design‑led flats become the backbone of urban living. Much like New York or Singapore, the city is embracing density and lifestyle‑driven housing, reshaping expectations of what a London flat should offer. Previously this trend has mostly been focussed in the central areas of London, however with demand outpacing supply, this shift is already rapidly being seen in the commuter suburbs.
New Homes Pipeline
Despite ambitious targets, delivery remains constrained:
2026: Around 35,000 new homes are expected to be completed in London, far below the official target of 88,000.
2027: Completions are projected to remain similar, with a cumulative shortfall of nearly 170,000 homes by 2027.
This persistent gap between housing targets and actual delivery ensures that rental demand will continue to exceed supply. For landlords and investors, it signals rising yields particularly in regeneration zones and boroughs with strong transport connectivity.
Rental Price - 2025 YTD
🔻Bristol -0.1% 🔻
🔺Glasgow +7%🔺
🔺Manchester +8%🔺
🔺Bristol +7%🔺
🔺Liverpool +6%🔺
🔺London +9%🔺
🔺Yorkshire & Humber +1.1%🔺
🔻Leeds -0.1% 🔻
🔻Bristol -0.1% 🔻 🔺Glasgow +7%🔺 🔺Manchester +8%🔺 🔺Bristol +7%🔺 🔺Liverpool +6%🔺 🔺London +9%🔺 🔺Yorkshire & Humber +1.1%🔺 🔻Leeds -0.1% 🔻
Current Market Drivers
Budget Uncertainty: Speculation around property tax changes earlier in the year caused many buyers to pause, leading to stalled transactions and softer price growth.
Mortgage Rates: While still more than double pre‑Covid levels, borrowing costs are expected to ease further as the Bank of England lowers rates into 2026, potentially bottoming out around 3.25%.
Rental Pressures: Higher tax rates on landlords’ rental income may discourage new rental supply, keeping upward pressure on rents even as house price growth moderates.
Investor Implications
For landlords and investors, the message is clear: the market is stabilising rather than collapsing. Prices are close to all‑time highs, but growth is subdued. This creates opportunities for those willing to act decisively:
Buyers benefit from increased choice and more realistic pricing.
Sellers must focus on presentation and value, as buyers are more discerning.
Landlords face tighter margins but can leverage rising rents to offset slower capital growth.
At Dwelling & Manor, we see this as both challenge and opportunity: a moment to reaffirm our ethos of high quality homes and design‑led innovation, ensuring our clients’ properties not only meet compliance but stand out in a market where quality command premium rents.
Key Takeaways for Dwelling & Manor Clients
Industry voices suggest confidence is likely to rebuild in the New Year, supported by strong underlying demand and easing inflation. The consensus is that while house price growth may remain modest, affordability will gradually improve, and the market will continue to move forward with cautious optimism. Rental prices continue to surge, especially in London. It will be interesting to see the affect of the Renters Rights Act on rental prices.
How We Continue To Help Our Clients
Market Insight & Forecasting
Provide tailored reports on regional growth trends so clients can identify high-performing areas.
Offer scenario planning to anticipate how upcoming legislation (e.g., Renters’ Rights Act) may affect investments.
Policy Guidance
Translate complex government updates (Autumn Budget, new rental laws) into actionable strategies for landlords and investors.
Help clients remain compliant while optimizing profitability.
Design-Led Value Creation
Advise on cost-effective property improvements that can significantly boost rental income, inspired by case studies.
Connect clients with trusted design and renovation partners.
Portfolio Optimization
Review client portfolios to balance risk and opportunity across regions.
Recommend strategies to capitalize on emerging markets.
Client Education
Host workshops or webinars summarizing market reflections and policy changes.
Provide digestible updates so clients feel confident in their investment decisions.
At Dwelling & Manor, we treat market shifts as signals to adapt. Every property we manage is guided by data, compliance, and a focus on long‑term performance