Between 2022 and 2024, the UK faced a convergence of economic headwinds: surging inflation, rising interest rates, a cost-of-living crisis, and global financial volatility. Yet despite the turbulence, the UK housing market remained remarkably resilient—defying predictions of a major correction and outperforming many global peers.
In this article, we examine what held the market together, explore which areas performed best, and assess why resilience is now a defining feature of UK property in 2025.
The Headlines: What Didn’t Happen
In 2023, many analysts predicted house price falls of 10–15%. What we saw instead was:
- A national average decline of just 3.2%, followed by a recovery in early 2024.
- Regional cities like Manchester, Leeds, Birmingham, and Glasgow returning to growth ahead of the South East.
- Rents rising, not falling, driven by a shortage of available stock and strong tenant demand.
Meanwhile, mortgage approvals rebounded by Q4 2024, and average house prices are once again tracking upward into 2025, according to Nationwide and the ONS.
Five Factors Behind UK Housing Resilience
1. Structural Undersupply
The UK has underbuilt for nearly two decades. Even during periods of falling demand, the chronic shortage of housing supply helped put a floor under prices.
- Net new homes in 2023 were down 17% YoY.
- Planning delays and build cost inflation kept delivery below long-term targets.
2. Employment & Wage Growth
Despite inflation, unemployment remained low, and wages continued to rise in key sectors like tech, finance, logistics, and healthcare.
- Stronger employment fundamentals limited forced sales and repossessions.
- Wage growth helped support affordability even as interest rates rose.
3. Investor Confidence in Yield
While capital appreciation softened temporarily, rental income remained strong—supporting gross yields of 5–7% in many regions.
- Investors held assets for income.
- Limited rental voids and high occupancy preserved cash flow.
4. Mortgage Flexibility
The shift to five-year fixed-rate mortgages and lender tolerance around refinancing gave homeowners and investors breathing room.
- LTVs remained stable.
- Lenders prioritised forbearance over foreclosure.
5. Regeneration and Infrastructure Insulation
Areas with ongoing regeneration—Manchester, Birmingham, parts of East London—benefited from long-term momentum and remained attractive to buyers, renters, and institutions alike.
Which Markets Showed the Greatest Resilience?
| Region/City | 2023 Price Change | Recovery by Q2 2025 |
|---|---|---|
| Greater Manchester | –1.9% | +4.7% |
| Leeds | –2.5% | +4.0% |
| Birmingham | –3.0% | +4.2% |
| London (Outer) | –4.5% | +2.1% |
| Glasgow/Edinburgh | –2.2% | +4.5% |
Source: Halifax, Zoopla, ONS (2025)
For Landlords: Cash Flow Carried the Day
While some investors paused purchases, those with existing portfolios generally:
- Maintained or increased rental income
- Refinanced at higher but manageable rates
- Found their properties remained in high demand, particularly in key rental cities
Yields remained positive, and even improved in areas where capital values dipped but rents continued rising.
Institutional Trends: BTR and PRS Stay on Course
Major build-to-rent and PRS developers did not exit the market during the downturn. Instead, they:
- Reassessed exit timelines and revised unit mix.
- Doubled down on amenity-rich schemes in cities with rental demand fundamentals.
- Partnered with local authorities to deliver affordable and mid-market rentals.
This long-term approach provided market confidence and signalled structural support for regional housing ecosystems.
The Ethira Perspective: What 2025 Teaches Us
At Ethira, we believe the 2023–2024 period has reshaped the risk lens through which UK property is viewed:
- Yield and income resilience matter more than speculative capital gain.
- Secondary cities with regeneration and population growth offer more consistent performance.
- Data and underwriting discipline will define the next generation of successful investors.
We continue to advise clients to focus on high-demand, well-located assets with rental visibility and low structural risk.
Final Thoughts
Resilience isn’t luck—it’s the outcome of real fundamentals: supply constraints, strong employment, and deep-rooted housing demand.
The UK property market in 2025 has emerged leaner, more stable, and more income-focused than before. For those looking beyond short-term volatility, it remains one of the most attractive and secure property environments in Europe.