1. High Interest Rates
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The Bank of England has raised interest rates multiple times to combat inflation.
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Higher interest rates = more expensive mortgages, reducing what buyers can afford.
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This causes demand to drop, which puts downward pressure on prices.
2. Cost of Living Crisis
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Ongoing high inflation has reduced people’s disposable income.
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Even if interest rates stay the same, people have less money to save or spend on buying property.
3. Falling Demand, Rising Supply
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Fewer buyers are entering the market due to affordability issues.
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At the same time, more properties are being listed, especially by landlords selling up (due to higher taxes and regulation).
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More supply + less demand = lower prices.
4. End of Pandemic Boom
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During the pandemic, house prices surged due to:
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Low interest rates
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Stamp duty holiday
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Desire for more space (work-from-home trend)
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That boom is now correcting.
5. Economic Uncertainty
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Uncertainty about jobs, economy, and global events (e.g. war, climate risks, etc.) makes people less willing to take on big financial commitments, like buying a home.
Example from 2025 (if current trends continue):
As of mid-2025:
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Annual house price growth has turned negative in many regions.
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London and South East have seen some of the biggest drops due to higher prices being more sensitive to rate changes.
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Buyers are negotiating harder, and sellers are dropping prices to close deals.
