Data from the Office for National Statistics (ONS) shows the UK economy grew by 1.1% in 2024, hampered by residual inflationary pressures in the first half of the year. Notably, Q4 2024 nominal GDP revised to £735.136 billion, marking a 6.05% year-on-year increase—0.95% faster than the previous quarter and 2.3% higher than the same period in 2023. Statista forecasts GDP growth will return to a normalized rate of over 2% from 2025 onwards.
Among G7 nations, the US posted the highest growth at 2.8% in 2024 (slightly down from 2.9% in 2023), while Canada grew 1.5% for the second consecutive year. The UK saw the sharpest acceleration, with GDP rising 1.1% in 2024—up 0.7% from 0.4% in the prior year.
The UK unemployment rate hit a historic low of 4.4% in Q1 2025, unchanged from Q3 and Q4 2024. Average wages over the past three years rose at their fastest pace in a decade, far outpacing European averages. In 2024, the average salary reached a record £37,430, a 6.6% increase from 2023. In Q1 2025, average earnings (excluding bonuses) rose 5.9% year-on-year—slightly above Q1 2024’s 5.8% and well ahead of February’s 2.8% inflation rate.
After years of interest rate hikes, UK inflation has stabilized, with borrowing costs returning to pre-2022 lows. The Bank of England (BoE) cut rates three times in 2024 to 4.5%, and is expected to reduce them a further three times in 2025, targeting 3.5–4%. As of Reuters’ May 1 report, the BoE is highly likely to lower the base rate by 0.25 percentage points to 4.25% at its May 8 monetary policy meeting. This has driven mortgage rates down: as of April 9, two-year fixed-rate mortgages averaged 5.3%, and five-year deals 5.15%.
Western central banks are lowering rates in tandem with falling inflation. Key markets—UK, US, Europe, and Australia—are projected to see rates drop to 3.35–3.5% (KF analysis).
UK mortgage approvals in 2024 rose by at least 50% compared to 2023, reflecting improved lending confidence.
UK House Prices Rebounding to All-Time Highs
After a Q4 2024 dip, UK house prices have posted four consecutive quarterly increases in 2025, edging toward record highs. Over five years, the average price rose from just over £310,000 in March 2020 to nearly £380,000—an over 20% increase, averaging over 4% annual growth, making UK property a proven "safe haven" for global assets.
Greater London’s population is set to exceed 10 million by 2035 (current: 9.54 million), with some of the highest population density in the world. Steady net international migration has consistently seen inflows outpace outflows.
Renting has become mainstream, with 29% of Londoners renting and 22% in social housing—leaving just 49% as homeowners. The rental population has doubled in 20 years, with extreme disparities in boroughs like Tower Hamlet (30% homeownership) and Kensington & Chelsea/City of London (40% each). 11% of Londoners live in overcrowded homes, rising to 20% in Newham.
Designated the world’s first National Park City in 2019, 47% of London is green space, leaving only 53% available for housing. Combined with glacial construction progress, supply is wildly out of step with demand.
Five key factors hinder housing delivery: construction costs, financial costs, building capacity, land availability, and construction regulations.
Critical Supply Shortfall
London needs 66,000 new homes annually, but 2023 and 2024 completions fell far short. In Q1 2025, just 1,210 private homes were started— the lowest since the 2008 financial crisis—with 23 of 33 boroughs reporting zero new projects.
US buyers accounted for 11.6% of prime central London 豪宅 (luxury homes) in 2024, with a Q4 surge; 25% of homes over £20 million were purchased by Americans, and 20% by Middle Eastern buyers. 6,100 US citizens applied for UK residency in 2024—a 20-year high, up 26% from 2023—with the steepest growth in the final quarter, likely tied to political shifts in the US. European capital from France, Italy, Germany, and Turkey is also flooding in, drawn to London’s asset preservation, long-term economic confidence, and world-class education—enduring strengths that transcend market cycles.
London property has delivered a 9.43% annualized return over 56 years, rising in 48 years and falling in just 8—most notably during recessions or crises like the global financial crisis. Post-Brexit and post-pandemic, prices have trended upward, hitting a near-£700,000 average in April 2025.
Rightmove’s Q4 2024 report showed average London rents at £2,695/month (£32,000/year), with inner London at £3,180/month (£38,000/year). Annual growth holds steady at 2.4–2.5% (2.7% in outer London), creating strong yields for landlords—though posing challenges for tenants, especially international students.
Institutional Capital Floods In
Private equity and pension funds have aggressively targeted UK rental housing since 2023. By Q3 2024, £1.5 billion was spent on single-family rentals—triple 2021/2022 totals—with nearly 5,000 units acquired (including investments by Aviva, Blackstone, and Lloyds). In 2025, BlackRock CEO Larry Fink highlighted the UK as a key "contrarian investment," citing undervalued fundamentals like robust legal frameworks and innovation, despite public pessimism.
London’s enduring strengths—stable institutions, world-class education, and global appeal—make it a "constant" amid global uncertainty. For 2025, investors should focus on six critical trends:
· Buyer’s market conditions
· Lower interest rates and borrowing costs
· Sustained high rents
· Rising remortgage activity
· Government housing initiatives
· Ongoing construction challenges
Gone are the days of prioritizing "location, location, location"—today, success hinges on "timing, timing, timing"—seizing opportunities when market conditions align.
A budget-friendly community in London’s Zone 5 is gaining traction, starting at £300,000 (RMB 2.88 million) with a 10% deposit of just RMB 288,000. Steps from the Elizabeth line’s Hayes & Harlington station, it offers direct, no-change access to the City, Bond Street, and Canary Wharf.
The area is a priority for local government, with major employers like Canon, IBM, M&S, and IMG’s Media City driving job growth and population inflows. Units feature efficient layouts: open-plan living-dining-kitchen spaces, private balconies, and storage—ideal for rental demand. Local one-bedroom flats rent for ~£1,800/month on Rightmove, offering strong rental yields relative to purchase prices.
This outlook underscores London’s enduring appeal as a global property hub, where strategic timing and data-driven decisions will define successful investments in 2025.
Buy a property in the UK with a team of professionals who know the UK property market best｜ Lansha Group
Founded in 2014 and headquartered in Paddington, London, Lansha Group has become one of the top 100 seafarers in the industry in the past 10 years, providing one-stop services for international property. We have many years of professional experience in dealing with all aspects of the property market, from choosing a property to opening a home, loans, solicitors, tenancy management and second-hand property sales. We provide 24-hour real-time service to our global clients, assisting them in dealing with the cumbersome formalities of property purchase and home inspection, so that they can move into their homes or invest in them with peace of mind. If you are looking to invest in the UK, Lansha Group has a professional investment team to assist you in selecting the best properties, analysing the housing information and regional development, and making a comprehensive assessment to choose the ideal home. Visit Lansha Group's website now to view our selection of properties and choose your dream home!
If you have any questions about buying a property in the UK, please feel free to contact us directly.
