Recent data from Rightmove reveals a growing divide in house price trends between northern and southern regions of the UK, with northern areas experiencing rising capital gains while southern regions face price corrections. This divergence coincides with a surge in property listings, offering buyers more choice than seen at this time of year since 2015.

Regional Price Trends Highlight North-South Divide

Rightmove’s latest figures show that in May, the average value of new property listings reached £378,304, marking a 1.2% increase month-on-month. This rise surpasses the typical 10-year seasonal average of 1%, despite an overall annual decline of 0.3% since May 2025.

Notably, house prices in the North East and North West increased by 2.7% and 2.6% respectively year-on-year. Conversely, London saw a 2.4% drop in prices, while the South East experienced a 1.6% decrease. This widening gap reflects contrasting market dynamics across the country.

Increased Buyer Choice and Market Activity

The surge in property stock has led to the highest level of buyer choice for this time of year since 2015. Colleen Babcock, Rightmove’s property expert, emphasised the resilience of market activity, particularly among first-time buyers, despite ongoing challenges such as rising living costs and mortgage rates.

She noted, “The number of sales agreed in the first-time buyer sector is performing better than expected and is broadly tracking the wider market.” Babcock added that prices in this sector are lower than a year ago, which supports affordability and encourages realistic purchasing decisions rather than buyers overstretching themselves.

Price Reductions and Market Implications

Rightmove also reports that 32% of existing homes for sale have undergone price reductions, with properties requiring a price cut remaining on the market for an average of 127 days. In contrast, homes priced correctly from the outset typically sell within 36 days.

While sales volumes are currently 4% below last year’s levels, they have increased by 2% compared to the same period in 2024. First-time buyer sales mirror this trend, down 4% from 2025, with average prices falling 0.7% annually, slightly more than the 0.3% decline seen across the national market.

Mortgage costs have eased marginally, with the average two-year fixed rate dropping to 5.18% from 5.42% the previous month, providing some relief to prospective buyers.

Expert Insights on Market Conditions

Adam French, head of consumer finance at Moneyfactscompare.co.uk, highlighted the regional affordability disparities amplified by higher mortgage rates. He explained, “For the same amount of borrowing a typical new mortgage in London is likely to cost around £348 more per month than before the Iran conflict spike in rates, compared to an increase of roughly £104 per month in the North East.”

French stressed that this growing north-south gap will increase affordability pressures in already expensive southern markets, while lower house prices in northern regions help cushion the impact for now.

Tom Bill, head of UK residential research at Knight Frank, pointed to the gradual effect of rising borrowing costs on demand, noting that more favourable mortgage deals arranged before recent geopolitical tensions will expire in the coming months. He also cited political uncertainty, including the upcoming Labour leadership contest and speculation about the autumn Budget, as factors likely to suppress prices and transaction volumes.

Louise Apollonio, sales and distribution director for retail mortgages at Shawbrook, observed that although prices rose 1.2% month-on-month, the market’s steady start is fading amid waning buyer demand. She suggested that rising costs and global uncertainty may be causing buyers to delay decisions, presenting opportunities for those seeking better deals amid ongoing affordability challenges.

Jeremy Leaf, a north London estate agent and former RICS residential chairman, described the current market as one of cautious negotiation, with buyers carefully ensuring mortgage payments remain affordable amid uncertain interest rate and inflation prospects. He noted that while many properties, especially flats, remain available, few sales are falling through, reflecting a market where asking prices are crucial in attracting genuine buyers during sensitive times.

What this means for landlords

The widening regional disparities and increased stock levels suggest landlords should carefully consider local market conditions when setting rents or planning property investments. In northern regions where prices and demand remain more robust, opportunities may exist for rental growth, while in southern areas, landlords might face longer void periods or pressure to adjust rents due to falling prices and reduced buyer activity.

Additionally, the rise in price reductions and longer selling times for over-priced properties indicates that landlords looking to sell should price competitively to avoid extended market exposure. The slight easing in mortgage rates could also influence buy-to-let financing decisions, potentially improving affordability for investors.

Source: Based on reporting from Property118

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