Could Rising Inflation Reshape the Wiltshire Property Market in 2025?

Let’s take a dig into what is going on, and how increasing inflation affects you and your property ambitions.

The Wider Picture

The UK property market as a whole has experienced significant shifts over the past few years, from the post-pandemic boom, which saw property prices skyrocket, to the cooling effect of rising interest rates over the course of 2021 and through to the middle of 2024 when they finally began to fall – albeit, slowly.

Now, with inflation unexpectedly rising to 3%, many prospective buyers, sellers, and investors will be left wondering what this means for house prices, mortgage rates, and overall market activity.

Let’s explore therefore how inflation influences the property market and what buyers, sellers, and investors should expect in the coming months.

What Does Rising Inflation Mean for the Property Market?

Inflation is a key economic indicator that affects nearly every financial decision – from everyday purchases to major investments like property.

When inflation rises, the cost of living increases, thus reducing household spending power. It is one of the main drivers that can produce a response from the Bank of England when it comes to voting on the base rate level. The issue is, it may cause the Monetary Policy Committee to delay or even reconsider its much-anticipated interest rate cuts. The reason that rates climbed so high over the last two years was almost entirely down to the staggering inflation we experienced, which rose to as much as 11% at its peak.

But why does this matter for the Wiltshire property market in 2025?

Well, rising inflation has several knock-on effects:

• Mortgage Rates May Stay Higher for Longer – The Bank of England had been expected to cut interest rates again in 2024 – perhaps multiple times. This would make borrowing more affordable. However, if inflation remains stubbornly high, rate cuts could be delayed, likely keeping mortgage costs elevated.
• Buyer Affordability – With higher interest rates, mortgage repayments become more expensive, limiting affordability for many first-time buyers and those looking to move.
• House Prices Could Stand Still or Fall – If borrowing remains expensive and demand slows, house prices may stagnate or decline, particularly in overheated markets. We saw this in particular over the course of 2023, when nationally house prices fell by 2.7%.
• Investors May Rethink Their Strategies – Buy-to-let landlords and investors often reassess their portfolios in response to inflation and interest rate trends. Higher costs could discourage new purchases, but some may see opportunities if prices soften.

Impact on Different Types of Buyers

First-Time Buyers

For first-time buyers, affordability remains a major hurdle, worsened by high property prices relative to income and stricter mortgage rules. In a high-cost-of-living environment, saving for a deposit has also become increasingly difficult.

Many had hoped that falling inflation would at least lead to lower mortgage rates, as the base rate cut a fortnight ago seemed set to usher in. However, with inflation hitting 3%, further rate cuts could be postponed, meaning first-time buyers may still face higher than hoped for borrowing costs.

Some buyers are waiting to see if property prices drop, but realistically, even if there were a drop, any such reduction is unlikely to be significant enough to meaningfully impact monthly mortgage costs. Nevertheless, where there is reduced demand, this could present an opportunity for well-prepared buyers to negotiate better deals for them – a so called ‘buyers market’.

House prices are unlikely to fall at all however, as continued housing demand and supply shortages are keeping the market stable. Despite economic headwinds, analysts still expect modest price growth of 2-4% this year.

Buy-to-Let Landlords and Investors

The private rental sector has faced mounting challenges, from higher mortgage rates to new regulations around energy efficiency and tenant rights. Some landlords have already exited the market due to declining profitability – something that has been a topic of conversation amongst industry circles.

With inflation still higher than expected, landlords could see further cost pressures, including increased maintenance costs and energy bills – and of course, that affects tenants too, as it does tend to lead to landlords needing to increase the rent they charge.

If house prices cool, some investors may see an opportunity to expand their portfolios at a lower cost, particularly as buy-to-let investment in Wiltshire remains an attractive long-term strategy. There is still little out there that offers better value as an investment than bricks and mortar, despite the challenges landlords face.

Wiltshire Homeowners Looking to Move

For homeowners planning to upsize or relocate, the rising cost of living and borrowing could slow decision-making. Those on fixed-rate mortgages might hold off on moving until rates improve, whilst those with variable-rate mortgages may feel increasing financial pressure.

Sellers may need to adjust their pricing expectations, particularly if demand weakens in their local area. As mentioned, overall this year, experts do tend to agree that property prices are likely to increase – but most have come in at predictions of 2% to 4%; if they are hearing ‘valuations’ from estate agents at 10% or 20% higher than a similar property sold for recently in the area, they should certainly tread carefully.

Regional Variations: How Different Areas Could Be Affected

National trends shape the overall market, but local factors play a crucial role in property prices and demand. Here’s how rising inflation might play out in different UK regions.

• London & the South East – Higher borrowing costs may hit affordability, where property prices are already high. Sellers may need to adjust expectations to secure sales – a trend witnessed in 2022 and 2023.
• Midlands & North of England – With more affordable house prices, these areas could remain relatively stable, though buyers may still be cautious.
• Scotland & Wales – Strong rental demand could keep buy-to-let investors interested, even if mortgage costs remain elevated.
• Coastal & Rural Areas – Popular relocation spots may see fewer city-based buyers if mortgage affordability limits movement… as far as locals in these areas go, both a blessing and a curse.

How could the Wiltshire Property Market be affected?

Wiltshire has a tie to the London market, with fast trains from Swindon and the existence of the M4 making it an attractive bet for commuters.

However, for exactly those reasons, with property prices in general being much more affordable here, it does present an interesting dichotomy, and in markets such as this we often find that London and South East buyers start to look enviously at our lower ‘pound-per-square-metre’ prices…. around £3520 in Wiltshire according to data from Housemetric, compared to £6,360 in London.

Whilst property prices might stall in London and the South East as affordability gets squeezed, this could shape up to be a market where demand in our own area starts to increase, pushing prices up further than in other parts.

Looking Ahead: What Should Buyers and Sellers Do?

At the moment, despite the inflation news, the property market remains stable. There has been a recent uptick in market activity – perhaps propped up by the post-Christmas surge alongside a forthcoming stamp duty change. Nevertheless, overall confidence in the market is still relatively high.

That said, with inflation running a little higher than forecast, both buyers and sellers can benefit from being strategic in their approach:

For Buyers:

✅ Assess Affordability Carefully – With mortgage rates likely to remain roughly where they are in the short term, ensure you have a clear budget and do definitely seek mortgage pre-approval (agreement/decision/mortgage in principle) before making offers.
✅ Consider Long-Term Stability – Buying a home is a long-term commitment. If you can afford repayments comfortably, short-term market fluctuations may be less of a concern. History tells us that despite bumps, property as a long term investment is sound and steadily increases in value.

For Sellers:

✅ Price Realistically – Overpricing in a cooling market could deter buyers, leading to prolonged listing times and price reductions later – not all of which are useful.
✅ Boost Property Appeal – With buyers becoming more selective, well-presented homes with energy-efficient features may attract stronger interest. Professional photography pays dividends.
✅ Be Open Minded – Sometimes a buyer won’t tell you what you want to hear, but don’t rule them out straight away. They may well be talked up – that is part of negotiation. You also may be able to structure a sale to include furniture within a higher price, or sometimes to cover legal costs or other things. These sorts of incentives can sometimes be the difference between closing a deal or languishing on the market.

Conclusion: Wiltshire Well Placed to Weather Any Storm

Despite inflation’s surprise rise, Wiltshire's property market remains resilient. While national headlines may spark uncertainty, local factors — such as commuter demand and relatively affordable pricing — could actually boost the area’s appeal.

In a changing market, knowledge is power. Buyers, sellers, and investors who stay informed and flexible will be best placed to succeed in 2025.