South of England Housing Market Update: What Buyers Need to Know Now

1. A Market Cooling—But Not Collapsing

In southern coastal regions like Truro, Exeter, and Bournemouth, house price inflation has slowed sharply, with annual growth sitting at just 0.3% compared to over 2% earlier in 2025 The Times. Across the UK, prices have risen only 1.3% year-on-year, driven partly by a larger inventory of homes for sale The TimesZoopla.

While activity is picking up—with sales up 5% and nearly 1.15 million transactions expected in 2025—supply remains elevated, especially in the South East and South West The TimesMoneyWeek.

2. The Impact of Tax Speculation on Buyer Confidence

Potential reforms—like a hefty property tax for homes over £500,000 or capital gains changes on primary residences above £1.5 million—are already making buyers pause before committing The GuardianMoneyWeek.

A local estate agent reflects:

“Rumours of tax reform have dampened enthusiasm, particularly in London and the South East,”
illustrating that uncertainty is affecting sentiment in high-value markets The Guardian.

3. Local Market Nuances: Southampton & Bath

• Southampton: Average house price is approximately £236,000, up just 1.1% over the past year. First-time buyers typically pay £210,000, while mortgage purchases average around £239,000. Rents are rising — up 6.1% annually to £1,217/month Office for National Statistics.
• Bath & North East Somerset: Real annual decline in house prices—down 4.6% to £398,000. First-time buyers saw prices fall 4.8%, and average mortgage purchase prices dropped 4.5% to £396,000. At the same time, rents surged by 10.6%, with one-bedroom properties averaging £1,119/month Office for National Statistics.

4. Buyer Prevalence & Pace

Buyer demand in the South is modestly up—4% higher year-on-year, with sales agreed up 5%, though houses are taking longer to sell (on average 39 days, compared to 27 in northern England) ZooplaMoneyWeek.

However, local surveys like RICS report negative sentiment:

• Buyer enquiries in the South East have dropped to a net –6%.
• Agreed sales are down –16%.
• Price growth is sitting at –13% net balance MPA Magazine.

5. Signs of Stability—and Caution

Nationwide recently recorded a 0.8% monthly price drop in June, a notable dip, while experts caution that national averages can mask critical local differences Financial Times.

Meanwhile, mortgage affordability rules have softened, giving buyers up to 20% more borrowing power compared to three months prior. This helped prevent a typical summer slide in the market, with viewings up 11% and sales up 8% ⸺ particularly helping southern England where supply has been high The Guardian.

6. What’s Promising Right Now

• More choices for buyers, especially in southern areas, creating bargain opportunities.
• Mortgage lenders loosening terms—lower thresholds or rates are encouraging buyer activity.
• Springboard for recovery starting in late 2025 heading into 2026, as predicted by major analysts like Savills and EY MoneyWeekGlobal Property GuideQuick Mortgages.

Savills expects a 1.6% growth by end of 2025 in the South East, rising to 2% by 2026 Fine & Country.

7. What This Means for You (If You're Seeking a Mortgage)

Good

• A high supply of homes gives buyers leverage—if priced right, you could negotiate better deals.
• Enhanced borrowing power could make homeownership a reality sooner.

Tough

• Regions like Bath indicate falling house prices for mortgage buyers, challenging seller expectations.
• High rental increases mean competition in rentals—but homeownership might offer long-term relief.

What to Watch

• Evolving property tax proposals could impact future affordability.
• Local market conditions are key—don’t rely solely on national averages.

Quick Summary: Southern England Snapshot

Factor                                               Current Status

Price Growth                        Very slow or declining in many southern areas

Buyer Activity                       Slightly up; but sentiments vary locally

Supply Pressure                    Elevated; giving buyers more choices

Mortgage Access                   Improving due to easing rules

Tax Policy Risk                   Lingering uncertainty dampening confidence

Future Outlook                        Modest growth expected post-2025

Final Thoughts

If you're exploring mortgages in southern England now, you're in a market full of possibilities—if you're informed and strategic. With high supply, improving lending terms, and price sensitivity in key areas, the opportunity to secure a strong buy is real.

Need help navigating the most suitable options in this complex environment? We’ve got the data, the insights, and the local experience to guide you to smarter decisions—and ultimately, your new home.