Welcome to State of the Market – our latest monthly round-up of key property market updates, with insights for small and medium-sized property developers.
Key takeaways at a glance:
- House prices experience post-Stamp Duty deadline slump.
- International interest in UK property falls to record low.
- UK housing costs hit £217 billion high for the first time.
- The Spring Statement and its impact on the housing market.
Key takeaway 1: House prices experience post-Stamp Duty deadline slump
The average price of a property in the UK fell by 0.5% in March, reducing from £298,274 to £296,699. Despite the recent unexpected dip, the annual rate of growth remains consistent at +2.8% and unchanged from February this year.
The race to purchase before the Stamp Duty threshold changes kicked in on 1 April has widely been reported as contributing to rising house prices. And now that the new thresholds (see the locations where homebuyers are most likely to be hit by Stamp Duty costs) have come into effect, demand and mortgage application volumes are now reverting back to pre-rush ‘normal’ levels.
Amanda Bryden, Halifax’s Head of Mortgages, comments: “Our customers completed more house sales in March than in January and February combined, including the busiest single day on record. Following this burst of activity, house prices, which remain near record highs, unsurprisingly fell back last month.”
Looking ahead to the coming months, mortgage affordability is anticipated to gradually improve and the overall market is expected to stabilise, fuelled by factors including an uplift in buyer demand, and more competitive mortgage deals.
What this means for SME developers: This short-term dip may create a window to negotiate better purchase prices – particularly if sellers are keen to offload stock post-rush. Ensure your finance is pre-approved so you can act quickly on new opportunities.
Key takeaway 2: International interest in UK property falls to record low
According to Q1 (January to March 2025) data captured by Hamptons’ latest International Applicant Index, the proportion of overseas house hunters in the UK dipped to a record low, with Americans and Middle Eastern buyers replacing those from Europe. Overseas-based applicants made up just 1% of house hunters across the UK; a figure that has reduced by half over the last ten years.
The impact of Brexit and the pandemic, as well as higher Stamp Duty and wider tax changes, have all been highlighted as being among the key contributing factors.
Interestingly, one in ten international applicants were seeking a property in the North of England (North East, North West and Yorkshire & The Humber) during the first three months of the year. Three-quarters (75%) of them were looking to buy a permanent home and the remaining 25% were searching for a second home or investment property.
What this means for SME developers: Reduced overseas competition can ease bidding pressure on key sites. Developers in northern regions may find less competition for deals and a growing appetite for high-quality homes among permanent residents.
Key takeaway 3: UK housing costs hit £217 billion high for the first time
Latest research published by Savills has revealed that UK housing costs are currently at an all-time high after reaching the £217billion mark.
Analysis of private and social rents, as well as owner-occupier mortgage costs, has uncovered that total housing costs increased by 10% last year. As a result, the UK’s total housing costs have risen by £41.2billion over the last two years, accounting for 60% of the total increase over the last ten years.
Lucian Cook, Head of Residential Research at Savills, explains: “Mortgage rates eased last year, but the higher costs incurred by households reflect the number who had come to the end of a fixed-rate-deal or moved home.
“While mortgage rates are projected to fall further this year, there are still a significant number of households that are due to come to the end of five-year fixed-rate deals later this year and will be facing an increase in their household bill.”
What this means for SME developers: Focus on delivering efficient, well-priced homes that cater to buyers conscious of rising living costs. Consider schemes that appeal to first-time buyers or downsizers looking to reduce their outgoings.
Key takeaway 4: The Spring Statement and its impact on the housing market
Chancellor, Rachel Reeves, may have announced the Spring Statement back on March 26, but the key takeaways continue to generate widespread discussions, as well as speculation across numerous industries, including the property sector.
Some of the more recent Spring Statement-related updates to have been published over the last few days include:
- While the CEO of the Mortgage Advice Bureau calls for the Government to provide more robust support for first-time buyers in this Financial Reporter article
- And in this Building article, Richard Steer, chair of Gleeds Worldwide and a Building The Future Think Tank commissioner, says the Government is ‘placing its future in the hands of the sector.’
What this means for SME developers: Government policy remains unpredictable – work with lenders who understand development risks and can move fast without relying on shifting incentives. Use this period to plan flexibly and build resilience into your financial structures.
And finally…
Five other articles we think you’ll also find interesting:
- The Guardian: UK housebuilders ‘very bad’ at building houses
- MoneyWeek: Is now a good time to buy UK housebuilders?
- Inside Housing: What will it take to accelerate housebuilding?
Steve Deutsch, CEO of CrowdProperty comments: “Despite short-term market fluctuations and cooling international demand, the underlying fundamentals of UK housing remain strong. With mortgage affordability gradually improving and signs of stabilisation emerging, opportunities are opening up for agile, well-capitalised developers who can act quickly and deliver the right product to an increasingly cost-conscious market.
We remain steadfast in our support of SME developers, who are critical to meeting the country’s housing needs. With resilient planning, a keen eye on shifting buyer demands, and strong funding partners, developers can not only navigate today’s landscape but also position themselves to thrive as market conditions strengthen.”
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