House prices climb as sellers hold firm on their expectations

House prices have risen again, marking the second straight quarter of growth this year, according to new data from Benham and Reeves.

Its latest Property Market Index Review from the lettings and estate agency shows that average UK property values stood at £305,680 in the second quarter of 2025.

That’s a 0.7% rise on the previous three months and 2.3% higher than the same period in 2024.

The firm’s quarterly review combines figures from the four main house price indices – Halifax, Nationwide, Rightmove and the UK House Price Index.

Market is resilient

Director of Benham and Reeves, Marc von Grundherr, said: “The housing market has demonstrated a great degree of resilience in 2025 and despite the turbulence of the wider economic landscape, we’ve seen house prices climb at a slow but consistent rate.

“Buyers have returned at mass, with mortgage approvals posting above the 60,000 monthly threshold for well over a year now.

“However, they remain restricted by higher interest rates which are impacting their mortgage affordability and the price they are willing to commit to when purchasing.”

He added: “In contrast, sellers are sitting stubbornly firm when it comes to their asking price expectations, which is evident from the widening gap between mortgage approved house prices and asking prices.”

Sellers see challenges

The data shows that in London, prices averaged £593,620 in Q2, up 0.9% since Q1 and 1.1% higher than a year ago.

It was also the capital’s second consecutive quarter of price increases, showing signs of continued stability after a challenging period for sellers.

However, the report also highlights a growing mismatch between what sellers hope to achieve and what buyers are prepared to pay.

The average mortgage-approved price came in at £284,307, compared with an average asking price of £378,312 – a gap of 33.1%, the widest since mid-2024.

In London, that disparity widened to 31.3%, with average mortgage approvals at £532,449 versus asking prices of £698,863.

Borrowers restricted by mortgages

While buyer demand has strengthened, Benham and Reeves notes that higher borrowing costs are still dampening what buyers can afford.

Nationally, sold prices averaged £265,560 in Q2, around 29.9% lower than the average listing price.

In London, the difference was smaller but still notable at 19.6%, marking the fourth consecutive quarterly increase.

Mr von Grundherr said: “Those who are securing a sale are the ones taking a pragmatic approach to current market conditions and adjusting their expectations accordingly.

“We’ve seen the level at which they’ve had to do so increase over the last year, but it does demonstrate that buyer appetites are healthy, as long as the property you are selling is within financial reach.”