Is Property Investment Still a Good Idea in 2025?

The current UK property market

The property market in 2025 presents a varied picture across regions and price brackets.

Recent house price trends

According to the ONS, UK house prices increased by 3.9% between May 2024 and May 2025, taking the average price to £269,000 and pointing to a resilient market.

In England, the North East saw the largest increase in house prices, rising by 6.3%. In contrast, the South West had the smallest growth at 1.9%.

Impact of inflation and interest rates

While interest rates have remained relatively steady through 2025, they’re still higher than pre-2022 levels – affecting affordability for both buyers and landlords. House prices have increased in 2025, but inflation has eased compared to the strong increases seen in 2022.

Why property still appeals to investors

Property investment continues to attract investors thanks to its long-term benefits.

Rental income and yield

The UK rental market remains strong. Average rents were up 6.7% in the 12 months to June 2025. A rental yield between 5% and 8% is generally considered favourable, making many areas attractive to buy-to-let investors.

Leverage and capital growth

Property lets investors use mortgages to boost their purchasing power. Even where price increases are modest, the combination of rental income and capital appreciation can provide healthy returns over time.

Inflation protection and diversification

Historically, property has offered a useful hedge against inflation. Rental income tends to rise in line with the cost of living, and housing often holds its value better than other assets in periods of inflation.

Challenges facing investors in 2025

While key factors, such as housing demand, rental yields and long-term growth, show promise, today’s market still presents some challenges.

Affordability and regulations

Higher purchase prices make it more difficult for new investors to enter the market. Meanwhile, updated landlord regulations – covering tax, energy performance and licensing – require careful consideration.

Mortgage costs

Although mortgage rates have stabilised, they remain higher than in previous years. This increases the importance of calculating potential yields and costs before committing to a purchase.

Residential vs commercial property

Different types of property come with varying risks and benefits. Choosing the right one depends on your personal situation and the market outlook.

Residential property, such as buy-to-lets, often benefits from strong tenant demand, especially in areas with growing populations. Commercial property, such as office or retail units, can offer higher yields but may be more sensitive to changes in the economy and tenant demand.

Is buy-to-let still worth it?

Buy-to-let remains a popular option, especially in areas with high rental demand. Northern cities like Manchester, Liverpool and Leeds have shown stronger rental yields and tenant demand than some southern regions.

With the right location and careful financial planning, buy-to-let can still deliver attractive returns.

Smarter investment strategies

A thoughtful and measured approach is key to successful property investment.

Focus on high-growth areas

Look for locations with strong employment markets, growing populations and planned infrastructure investment. Areas near universities, business hubs or regeneration zones often have a great deal of potential.

Review investment metrics

While a rental yield between 5% and 8% is usually considered a good return, properties offering yields of 6% or more with scope for long-term growth are particularly worth a closer look. Don’t just focus on rental income – also think about how much the property might increase in value while you own it.

Speak to a tax advisor

Keeping on top of landlord tax obligations and licensing requirements is essential. Professional advice can help you stay compliant and optimise your returns.

Should you invest in property in 2025?

Property continues to offer a relatively stable investment option, but whether or an investment is a good idea will depend on your individual goals and circumstances.

Risk and Reward

Investing in property gives you a tangible asset that can generate income and long-term growth. However, it also requires upfront capital, ongoing management and comes with some exposure to market shifts.

Choosing the right route

Whether you invest in residential buy-to-let, commercial units or property funds, the best option will depend on your level of experience, appetite for risk and available time.

Think long-term

Property tends to suit investors with a longer-term outlook. While it may not deliver quick returns, holding property over time can provide rental income and the potential for capital growth.

Ready to buy a new home? Explore our range of new builds across the UK and contact our Sales Advisers to start your homebuying journey today.

Please note: the information in this article does not constitute financial advice or a recommendation to buy. No view is given as to the present or future value of property investment, and investors should form their own view or consult an independent financial adviser.