The UK property market is showing early signs of recovery after four years of stagnant sales and falling prices, experts have told Money Mail.
While calling the bottom of the property market remains difficult, data and anecdotal evidence from estate agents indicate recovery conditions are taking shape. Slowing price growth has made property more affordable than at any point since 2013, widening the pool of potential buyers as institutional investors begin purchasing UK residential properties.
Nicholas Finn, buying agent at Garrington Property Finders, said: "We have seen an increase in clients committed to moving in recent months. Many people have put things on hold for the past year or two. Now they just want to get on with it and they'll take what they can get on their sale, and then see what they can then afford to buy." Finn added: "I speak to a lot of estate agents and demand is still high for properties that don't come around often and we still see well-priced homes going to sealed bids and at over the asking price."
House prices and four years of stagnation
Following the Covid-19 pandemic in 2020, property market activity surged as families left cities following lockdowns, work-from-home professionals relocated away from office hubs, and aspiring first-time buyers used accumulated savings. However, after the post-pandemic rush subsided, market transactions ground to a halt in 2022.
Prices have barely moved over the past four years, leaving the typical home worth only 2 per cent more than in the summer of 2022. As of July, the average property is worth £299,253 according to Lloyds Bank, representing a 0.1 per cent annual increase, the slowest annual growth rate recorded since November 2023.
Regional data from Lloyds Bank shows the price of a typical home in the South East fell 4.6 per cent over four years, while South West prices dropped almost 4 per cent. Land Registry figures show average prices of sold properties in London dropped 6 per cent compared to the summer of 2022. Factoring in inflation, the average UK property value has fallen by around 15 per cent in real terms over four years, rising to 20 per cent or more in London and parts of the South.
Policy changes and tax concerns have also dampened market activity. The Renters' Rights Act introduced earlier this year gave tenants broader powers, prompting buy-to-let landlords to sell properties over profitability concerns. Meanwhile, buyers at the top end of the market have deferred investments over fears of potential mansion and wealth taxes, while existing property owners without urgent moving needs delayed listing their homes.
Affordability ratios and mortgage rates
According to Nationwide Building Society, average UK house prices stand at 5.6 times the average annual salary of a full-time worker. This represents the lowest ratio since 2013 and approaches the long-run market average of 4.8. House prices were 20 times typical annual rent in 2022, but official figures show that ratio has fallen to just over 16 times.
Mortgage rate projections could also influence recovery momentum. Economists at Capital Economics forecast interest rates will be cut from 3.75 per cent to 3 per cent in 2027, which could lower mortgage rates by 1 percentage point from current levels, though some traders bet on rate increases. Average mortgage rates rose from 4 per cent to around 4.75 per cent this year, adding more than £1,500 annually to the cost of buying an average-priced home.
Institutional investment in build to rent
Rob Dix of Property Hub, a buy-to-let sourcing company putting together over £100 million of property deals each year for clients and co-host of the Property Podcast, said market conditions could be at a turning point depending on the government Budget on October 28. Dix said: "The fundamentals of financing have been steady for a few months and property is more affordable after the last couple of years of nominal stagnation and real-terms falls. For investors there are also better yields due to higher rents and static house prices. But sentiment has been awful, so if that improves then activity could turn quite quickly."
Corporate landlords funded by pension schemes and institutional investors are buying and constructing blocks of flats for long-term rental income. Savills analysis shows £2.2 billion was deployed towards build-to-rent schemes between April and June this year, the highest recorded total for that quarter, putting the year on track for record investment.
Major corporate transactions include Morgan Stanley and Ridgeback acquiring London rental platform Metra Living and its nearly 3,200 homes for £1 billion. International developer Greystar also completed a £500 million acquisition of 904 homes at Elephant Park in London. Both deals rank among the three largest build-to-rent transactions ever recorded in London.
Craig Fish of Lodestone Mortgages said: "The property market isn't crashing back to life, it's thawing slowly, and there are real green shoots if you know where to look." Fish warned that double-digit builder discounts suggest a slower market rather than a sudden price bounce, adding: "Wage growth is still edging ahead of inflation, so affordability is improving even with mortgage rates creeping up this year."
Sam Smith of Property Hub reported smaller investors securing discounts between 13 per cent and 20 per cent off asking prices through bulk purchases, stating: "The market is tough for developers. This year, we are typically seeing discounts of between 13 per cent and 20 per cent off asking prices due to the fact we are buying in bulk. While we have seen the exodus of smaller landlords leaving, there are still plenty of investors in the market and lots of limited company landlords buying right now."
Developer losses and house hunter options
Building firms and estate agencies continue to report financial strain from weak sales. Housebuilder Crest Nicholson reduced its annual profit guidance after posting a first-half loss, while estate agency Foxtons reported a 57 per cent drop in pre-tax profit for the first half of 2026. Property consultancy Molior recorded a record number of completed, unsold new homes in London.
For prospective buyers considering market timing, Craig Fish advised: "I'm telling clients not to wait for a starting gun that isn't coming. If the numbers work today, they'll likely work better than waiting for a recovery that's already priced in by the time it's obvious."
Matt Coulson, founder of mortgage broker Heron Financial, noted that falling property prices reduce the net cost of trading up to a larger home. Coulson said: "Everyone's fixated on whether we've hit the bottom. If you're actually moving home, that's the wrong thing to worry about. When you sell and buy at once, you're doing both in the same market, so the headline price barely matters. What matters is the gap between the two, and this is the bit most people miss: In a softer market, trading up gets cheaper. A 10 per cent dip takes far more off the bigger home you're buying than the smaller one you're selling, so the cost of moving up actually comes down. The recovery everyone's waiting for is the very thing that would make trading up dearer." For example, a 10 per cent price decline reduces a £500,000 home sale by £50,000 while cutting a £1 million replacement purchase by £100,000.
Nicholas Finn noted: "Once the market turnaround happens, it's like a ship going out to sea and you could miss the boat. Better to buy roughly around the bottom. If you try and buy while prices are going up, you're much more likely to get outbid or be gazumped. It becomes a bit like an eBay bidding war. When mortgage rates fall, I think the market will move. A 1 per cent drop in interest rates could make someone's mortgage 20 per cent to 25 per cent cheaper."
Peter Dockar, chief commercial officer at mortgage lender Gen H, highlighted market conditions for first-time buyers. Dockar said: "The market is firmly in favour of buyers right now - house price listings are flat year on year but sales are down by about 6 per cent according to Rightmove. If you're buying your first home, now could be the perfect time to buy." Finn advised buyers targeting properties withdrawn from sale to support low offers with evidence of recent nearby sales.
Regional price cuts and flat market discounts
PropertyData analysis of Land Registry records shows that roughly 43 per cent of sellers in Canary Wharf, the Isle of Dogs, Canning Town and Royal Docks in east London sold at a loss over the past 12 months. More than a third of sellers in Shildon, County Durham, and Liverpool city centre also completed sales at a loss.
Mark Alexander, founder of Norwich-based buy-to-let platform Property118.com, noted: "Flats seem to have suffered some of the steepest valuation falls recently, with hundreds, sometimes thousands, listed for sale across many major towns and cities. A lot of landlords are keen to exit, so making offers 10 per cent or even 20 per cent below asking price on several suitable properties could uncover a genuine bargain." According to Zoopla data, 80 per cent of flats currently listed for sale fail to find a buyer within six months. PropertyData analysis of Land Registry figures shows most flat sellers in city centres including Sheffield, Birmingham, Leicester and Newcastle lost almost £40,000 on average.
Rightmove statistics indicate widespread asking price pressure across regional markets. In Edgbaston, Birmingham, average asking prices fell 9 per cent year-on-year to £304,878, with homes taking 93 days to sell, 21 days longer than last year. In Seacroft, Leeds, average asking prices dropped 7 per cent to £208,162, taking 65 days to sell, 20 days longer than a year ago. In Shaftesbury, Dorset, average asking prices fell 11 per cent to £334,775, taking 83 days to sell, 43 days longer than last year.
Mortgage buyers also face shifting rate conditions as conflict with Iran has increased inflation expectations and reduced interest rate cut prospects. Borrowers looking to secure new financing or replace expiring fixed rates can evaluate products from London & Country Mortgages (L&C), an advisory firm authorised and regulated by the Financial Conduct Authority under registration number 143002.
