UK house prices nudged higher again in May 2025, offering reassurance to landlords and property investors watching for signs of market resilience. Nationwide reported a 3.5% annual rise in property values, up slightly from 3.4% in April, with prices also increasing by 0.5% on a monthly basis. The average UK home now stands at £273,427.
But the real story lies in where the growth is happening. Over the past five years, homes in predominantly rural areas have soared by 23%, compared to 18% in more urban parts of the country—signalling a structural shift that landlords would do well to watch.
“Annual UK house price growth was marginally stronger in May at 3.5%,” said Robert Gardner, Chief Economist at Nationwide. “House prices rose by 0.5% month on month, after taking account of seasonal effects.”
Rural price growth outpaces the cities
Nationwide’s latest House Price Index revealed that rural properties continue to outperform. “Between December 2019 and December 2024, house prices in predominantly rural areas increased by 23%, compared with 18% in areas that are largely urban,” Gardner said.
Although the ‘race for space’ began during the pandemic, he noted that “less urban areas have continued to hold the edge in terms of house price growth.” Preferences among older buyers—especially those aged 55 and over—remain tilted toward countryside living, while younger movers in the 25–34 bracket tend to favour cities.
For landlords, this presents an emerging opportunity: long-term rental stock in villages, hamlets, and market towns is in demand and gaining value faster than its city-centre counterparts.
Jean Jameson, Chief Sales Officer at Foxtons, said: “The market continues to make positive strides forward, with the rate of house price growth accelerating on both a monthly and annual basis… This momentum has only intensified following a renewed wave of buyer and seller activity as the stamp duty dust has settled.”
Borrowing costs stabilise as buyer demand holds steady
While inflation and interest rates remain key concerns for the broader economy, the housing market is showing encouraging signs of balance. Despite the Bank of England holding the base rate at 4.25%, competition between lenders has pushed mortgage rates down—a move likely to support both homebuyers and investors.
Verona Frankish, CEO at Yopa, explained: “Not only has the market benefited from a degree of post-stamp duty deadline stability, but the reduction in the base rate seen at the start of May has also helped to drive buyer activity… improving affordability where mortgage rates are concerned.”
Marc von Grundherr, Director at Benham and Reeves, added: “It’s clear that it’s back to business as usual… predictions of a positive year for the property market are ringing true.”
Further strength is coming from investors. Tom Brown, Managing Director of Real Estate at Ingenious, noted that “any decline in homeowner sales is likely counterbalanced by increased demand from renters and investors.” He added that institutional landlords and build-to-rent operators are injecting “significant investment capital for assets for long-term rental.”
A changing market brings fresh prospects for landlords
For UK landlords, the current landscape is one of cautious optimism. While some headwinds remain—particularly in terms of inflation—most indicators suggest strong tenant demand, competitive lending, and continued price resilience.
Nathan Emerson, CEO of Propertymark, captured the sentiment: “It is reassuring to witness consistent house price growth and a strong appetite as people continue to approach the homebuying and selling process… Ultimately it would be welcome news for consumers should there be any further base rate cuts.”
There are, of course, questions still in the air. Will the Bank of England act decisively on rates? Could a future government ease the planning logjam to increase supply? Will rural growth continue to outstrip urban? For now, though, one thing is certain: landlords willing to adapt to shifting patterns in housing demand may find themselves well-positioned to benefit in 2025 and beyond.
