Rising UK Housing Costs: A Record Burden on Households

UK households faced unprecedented housing costs in 2025, spending a record £226 billion, according to research by Savills. This figure represents a £66 billion increase, or 41%, over the past five years. The growth rate has slowed significantly, with a rise of £8 billion (3.6%) in 2025 compared to £22 billion in 2023 and £19 billion in 2024. The increase in mortgage interest payments was particularly notable, rising by 9% to £53.6 billion, which constituted over half of the total rise in housing costs.

The GuardianSavills: UK housing costs hit record high but growth is slowingUK households spend record amount on housing amid cost pressures

The burden of housing costs has been felt most acutely by mortgage holders, with the average annual payment for the 8.8 million mortgaged homeowners reaching £13,000. In contrast, rental costs increased more modestly, totaling £112 billion in 2025, with private renters paying an average of £15,000 annually—reflecting a 27% increase over five years. The rental market saw a slower growth rate, with costs rising by 2.75% in 2025.

Savills: UK housing costs hit record high but growth is slowing

London recorded the smallest percentage increase in housing costs at 36%, yet it still accounts for 23.4% of the UK’s total housing expenses. In contrast, Northern Ireland experienced the largest rise at 55%. Despite the slower growth in London, the total housing costs there are comparable to the combined totals of Scotland, North East England, North West England, and Yorkshire and the Humber.

UK households spend record amount on housing amid cost pressures

Despite the ongoing global uncertainties, including tensions related to the Iran conflict, the UK housing market has shown signs of stability. Rightmove reported that new seller asking prices rose by an average of £3,023 in March 2026, indicating a typical seasonal increase of 0.8%. The number of homes for sale remains at an 11-year high, which has limited more significant price growth.

The GuardianBirmingham MailSavills: UK housing costs hit record high but growth is slowing

Lucian Cook, head of residential research at Savills, noted that the impact of higher interest rates on housing costs tends to have a prolonged effect on household spending. He expressed concerns about the potential for another wave of inflation, which could further complicate the housing market. Cook stated, “Until recently, 2026 looked set to offer some respite, but that is now less certain given the prospect of another wave of inflation.”

Savills: UK housing costs hit record high but growth is slowing

Critics argue that the rising costs of housing are exacerbating the cost-of-living crisis in the UK, making it increasingly difficult for households to manage their finances. The disparity in growth rates between mortgage costs and rental prices has raised concerns about affordability and accessibility in the housing market.

Birmingham Mail

• “The pace of growth in the nation’s housing costs has slowed substantially compared with 2023 and 2024,” — Lucian Cook, Head of Residential Research, Savills

Savills: UK housing costs hit record high but growth is slowing

• “In a market where homeowners are fixing their mortgages for longer, the impact of higher interest rates on housing costs – and on households’ ability to spend elsewhere in the economy – tends to have a much longer tail,” — Lucian Cook, Head of Residential Research, Savills

The Guardian

The current state of the UK housing market reflects a complex interplay of rising costs, regional disparities, and external economic pressures, leaving many households grappling with the implications of these changes.

Birmingham Mail