Analysts warn of fragile housing recovery despite data showing recovery

UK house prices have jumped at their fastest annual pace in more than a year, but analysts have warned the apparent recovery masks a fragile property market struggling under high borrowing costs and weak demand.

Figures from the Office for National Statistics showed average house prices climbed 3.8 per cent in the year to April, taking the typical UK property value to £270,000.

The sharp rise marked the strongest annual growth since March 2025, but economists cautioned that the figures were distorted by last year’s stamp duty changes, which created an unusually weak comparison point.

The market remains deeply divided. While prices rose across much of the UK, London continued to suffer, with average values falling 2.1 per cent over the year — the ninth consecutive month of annual declines in the capital.

Northern regions recorded some of the strongest gains, with the North East showing annual price growth of 9.9 per cent, although the ONS warned this was heavily influenced by a “base effect” following sharp falls a year earlier.

Despite the headline surge, the underlying picture points to a slowdown. Buyers are becoming more cautious, with higher mortgage costs limiting affordability and more homes coming onto the market.

Richard Donnell, research director at Zoopla, said the jump in inflation was “artificial” and linked to the end of last year’s stamp duty relief.

He warned buyer demand was down 14 per cent compared with the previous year, creating what he described as a “buyers’ market” where sellers must price carefully.

The housing data came alongside fresh inflation figures showing consumer prices remained stuck at 2.8 per cent in May, offering some relief to mortgage borrowers but providing little indication of a rapid fall in the cost of living.

The combination of stubborn inflation, high borrowing costs and regional weakness leaves the housing market facing a difficult balancing act: prices may appear stronger on paper, but Britain’s property recovery remains uneven and vulnerable.

Managing Director of House Buyer Bureau, Chris Hodgkinson, said: “The latest figures reinforce what many sellers are already experiencing on the ground, which is a market that remains functional but far from fast-moving.

House prices may be moving gradually up, but the real challenge is transaction momentum. Buyers are taking longer to make decisions, affordability constraints continue to limit purchasing power, and many sales are still falling through before reaching completion.

Until confidence improves and transactions become easier to progress, we can expect house price growth to remain fairly subdued”

Verona Frankish, CEO of Yopa, said: “While house price growth remains relatively modest, the fact that values continue to rise is a positive sign for the wider market.

The adjustment to higher mortgage rates has largely taken place and we’re now seeing a more balanced market emerge, where buyers and sellers are approaching transactions with realistic expectations.

It’s unlikely we’ll see significant house price inflation in the near term, but a stable market is ultimately a healthier one, particularly after the volatility of recent years.”