🏡 UK & Isle of Wight Property Market Update – May 2025

From the team at Red Squirrel Property Shop

If you’re active in the Isle of Wight property market—or just watching closely—you’ve probably noticed: the market is shifting again. But this isn’t the chaos some headlines would have you believe.

Right now, it’s not about panic. It’s about preparation.

Here’s a no-nonsense look at what’s really happening in the UK and local property market, what it means for buyers, sellers and investors on the Island, and where we see the opportunities in 2025.

🔍 House Prices: Slowing, Not Falling

Let’s start with the bigger picture. According to Zoopla’s latest data, UK house price inflation currently stands at 1.6% year-on-year as of March 2025. That’s a noticeable increase from 0.2% last spring, though slightly down from 1.9% at the end of 2024.

So yes—prices are still rising, just at a slower, more sustainable pace.

On the Isle of Wight, this trend is playing out as a more balanced market. Buyer demand has cooled slightly—likely a mix of seasonal slowdown and wider economic uncertainty—but here’s the key stat:
➡️ Sales agreed are up 6% compared to this time last year
➡️ Stock levels have risen by 12%

That means:

• Buyers now have more choice

• Sellers need to be more realistic on pricing

📍 Regional Divide: What It Means for the Island

Nationally, property markets in the Midlands, North, and Scotland are outperforming the South in terms of price growth. Many of these regions are seeing 2.2% to 6% increases, while the South—including the Isle of Wight—is showing flatter growth of around 0.5% to 1%.

But context matters.

On the Island, affordability remains a challenge for some, but we’re still seeing steady interest, especially from:

• Lifestyle movers looking to escape city living

• Buy-to-let investors targeting solid rental yields

• Mainland buyers looking for second homes or relocations

Coastal living, natural beauty, and a strong sense of community continue to make the Isle of Wight a compelling option.

💸 Affordability Could Improve: Mortgage Rules Easing?

Here’s one of the biggest trends to watch in the second half of 2025:

Mortgage stress testing—the way banks assess what buyers can afford—is starting to ease. If the testing rate drops from 8.5% to something more realistic like 6.5%, some buyers could see their affordability jump by up to 20%.

That doesn’t necessarily mean we’ll see a price spike—but it could bring more buyers back into the market, helping unlock stalled transactions and stimulate demand.

🛠️ What Should You Be Doing?

👀 Buyers:

Waiting for a market crash? You could be waiting a long time. With more properties on the market, slower price growth, and potentially more flexible lending ahead, now could be the time to make your move—especially before interest rates start to fall again and competition picks up.

🏡 Sellers:

Homes are selling—but pricing matters more than ever. Today’s buyers are savvy and well-informed. If your property isn’t priced to match the market, expect a slower sale. Work with a local expert who knows how to get it right.

💼 Investors:

The Island still holds great potential—particularly for long-term investors. Demand for rentals remains strong, and we’re seeing continued interest in towns like Newport, Ryde, and Cowes. In a stabilising market, strategic investments win.

✅ Final Thoughts from Red Squirrel Property Shop

We’re not in a boom. We’re not in a bust. We’re in a stabilising, rebalancing market—and that opens the door for buyers, sellers and investors who are ready with a plan.

At Red Squirrel Property Shop, we’ve always believed in honest advice, local expertise, and keeping things straightforward. Whether you’re thinking of selling, buying, or investing, we’re here to help you navigate the market with confidence.