There’s bad news today as two leading property industry forecasts have been downgraded for 2025.

Hamptons has downgraded its 2025 rental growth forecast from 4.5% to 1.0% across Britain, reflecting a faster-than-expected market slowdown. 

Meanwhile Rightmove has halved its forecast for house price rises in 2025, from 4% to just 2% – that’s below the rate of inflation. 

Hamptons says rents on newly-let properties rose 0.4% year-on-year across Great Britain in June – the weakest growth since August 2020 – with declines recorded in London (-2.5%), Wales (-0.9%) and Scotland (-0.5%).

Tenant demand has weakened, down 11% in the first half of 2025 compared to the same period of 2024, and 20% below 2019 levels, as falling mortgage rates have helped renters buy their own homes.

A weaker labour market outlook is expected to reduce growth by 0.5 percentage points each year.  This means Hamptons now expects rents to rise 3.5% in the year to December 2026 and 3.0% in 2027. 

The agency’s head of research, Aneisha Beveridge, says: “The rental market softened more quickly than we anticipated towards the end of last year.  What initially appeared to be a London-centric slowdown has now spread across the country, with rents declining in multiple regions and growth easing elsewhere.  

“A combination of falling mortgage rates and a weaker labour market has shifted the dynamics – more affluent renters are becoming first-time buyers, while the economic slowdown is limiting what others can afford.

“That said, this isn’t the end of the rental growth story.  The structural shortage of rental homes remains unresolved, and upcoming regulatory changes, such as the Renters’ Rights Bill and new EPC requirements, are likely to constrain supply further and add to landlords’ costs.  A slowdown in Build To Rent development this year is also expected to result in fewer new rental homes entering the market in the coming years.  

“These pressures will continue to underpin rental growth over the medium term, even as the market recalibrates in the short-term.”

The primary driver behind this cooling rental market has been the transfer of demand from the rental sector to the sales market.  As mortgage rates have fallen, homeownership has become more accessible, leading to strong first-time buyer activity.  First-time buyers purchased a record 33% of homes sold across Great Britain in H1 2025.

This shift has resulted in 11% fewer tenants looking for homes across the country in the first half of 2025 compared to the same period in 2024, with tenant demand now 20% lower than in the first half of 2019.

Lower mortgage rates have also reduced, albeit not eliminated, the financial pressure on landlords.  After several years of rapidly rising costs, many landlords who are now remortgaging are finding more favourable rates, diminishing the need to pass on higher costs to tenants.

While tenant demand has weakened, there were 8% more homes available to rent across Great Britain in H1 2025 than during the same period in 2024.  

This doesn’t reflect increased landlord investment, but rather a slowdown in tenant demand, with properties taking longer to let.  Additionally, tenants exiting the rental sector are not being replaced at the same pace.  This has contributed to a greater pool of available rental homes.

Rents are now falling not only in London, but also in Scotland and Wales.  The slowdown is broadening across all regions, indicating that what was a London-centric phenomenon is becoming a nationwide trend.

London continues to experience the most significant decline in rents, with rents on newly let properties falling for the sixth consecutive month, down 2.5% year-on-year in June.  

This marked the biggest annual decline in the capital since May 2021.  Consequently, the average rent of a newly let property in London (£2,288 pcm) is now back to May 2023 levels.  In Inner London, average rents have decreased to their lowest level since October 2022, down 3.8% year-on-year to £2,694 pcm.

And so to Rightmove, which also announces a cut in its forecast for 2025.

Average new seller asking prices have dropped by 1.2% (-£4,531) in just one month according to the portal.

While there’s usually a seasonal dip in prices in summer, this is the largest July price drop recorded by Rightmove over more than 20 years of data. 

The property website says the continued decade-high level of housing supply for sale is limiting price growth, compounded by the start of the traditional summer holiday season. 

Summer sellers typically need to work harder compared to the spring to capture distracted buyers’ attention. 

Rightmove attempts to calm fears by saying that in some previous years, such a price drop might have been an indicator of a slower market. However, it insists that what it calls “tempting pricing” from new sellers is helping to improve buyer affordability, enticing new buyers into enquiring, and helping year-on-year growth in the numbers of sales being agreed. 

The website states this morning: “Pricing is key, and sellers who are over-optimistic on their initial asking price are increasingly at risk of getting lost among the competition. The muted price trend that we’re seeing at this point in the year has led Rightmove to reforecast its property price prediction for 2025 from +4% to +2%.”

With mortgage rates falling and two more Bank Rate cuts still expected in 2025, the overall outlook for the second half of the year remains positive, it insists. 

Rightmove spokesperson Colleen Babcock says: “We’re seeing an interesting dynamic between pricing and activity levels right now. 

“The healthy and improving level of property sales being agreed shows us that there are motivated buyers out there who are willing to finalise a deal for the right property. 

“What’s most important to remember in this market is that the price is key to selling. The decade-high level of buyer choice means that discerning buyers can quickly spot when a home looks over-priced compared to the many others that may be available in their area. 

“It appears that more new sellers are conscious of this and are responding to this high-supply market with stand-out pricing to entice buyers and get their home sold.”