• UK house prices lagged inflation and invested portfolios in the past year, with equities performing six times better

• Rathbones raises concerns around retirement planning as property slump extends, with second home hotspots and London disproportionately hit

June 11 ,2026 | UK houses lost value in real terms in 2025 and significantly underperformed equities, according to new research by Rathbones, one of the UK’s leading wealth and asset management groups.

Its annual report, “Don’t Bet the House”, which compares gains from investing in residential property with typical stock market portfolios, warns property is no longer a reliable investment for people seeking short or mid-term growth.

Over the past year, UK house price growth has continued its slump, rising just 1.7% - only half the pace of inflation. Whereas a simple investment mix of 25% UK equities and 75% international equities rose by 11.8% before dividends, Rathbones analysis showed.

This is not a one-year wobble. After adjusting for inflation, the average UK home was worth less in 2025 than in 2016, with the proceeds of a typical house sale buying less than they would have nearly a decade earlier.

Adam Hoyes, Senior Asset Allocation Analyst and author of the research, said: “We believe there’s been a structural shift, with recent performance reflecting weakness in the drivers of UK house prices rather than short-term volatility. This is not a one-off, rather it extends a poor run for UK house prices going back almost a decade.”

The report built on Rathbones’ 2025 analysis and examined recent performance of the UK housing market and fresh factors shaping UK house prices, including slower real income growth, higher mortgage costs, and a more demanding tax and regulatory environment around buy-to-let investments.

It notes a particular collapse in London, where house prices fell in 17 of the 32 boroughs in 2025, a total 1.7% fall across the capital. This masks dramatic falls in some places, such as Westminster, Kensington and Chelsea, where prices plunged 14% and 7% respectively.

Charlie Newsome, Senior Investment Director at Rathbones, said: “We’re seeing many people selling their buy-to-let and other rental properties because they no longer make sense as short to medium-term investments, and they are putting that money into invested portfolios instead. Right now, residential property isn’t seen as a driver of wealth for later life and retirement for most people.”

“Houses have a special role in British attitudes to wealth,” he continued. “But we need to think long term for our clients, helping them navigate economic shifts in order to still meet their goals.”

Rathbones’ new research also examined house prices in the 25 local authorities in England with the highest density of second homes, given their common role in financial planning. It found that areas with high concentrations of second homes have also seen prices fall disproportionately, with 19 of the 25 recording declines in 2025, compared to 26% nationally. This had risen to 20 of 25 by the first quarter of 2026.

In its first “Don’t Bet the House” analysis of investment in residential housing versus invested portfolios last year, Rathbones concluded that there was a golden age of property investing in the UK, from the mid 1980s, when returns exceeded other investments over thirty years. Longer-term trends however, before and since, lacked the policy and economic drivers of this growth, resulting in more sluggish growth.

ENDS

Notes to Editors

For further information or to see the full report, please contact:

Hugh Morris (hugh.morris@rathbones.com) or Press@rathbones.com

Frances McNab (frances.mcnab@rathbones.com)

About Rathbones rathbones.com

Rathbones Group Plc (Rathbones) is one of the UK’s leading providers of investment and wealth management services for private clients (individuals and families), charities, trustees, and professional partners. Rathbones’ purpose is to help more people invest their money well, so they can live well.

With roots dating back to 1742, the company has been trusted for generations to manage, preserve and grow its clients’ wealth. Services include discretionary investment management, fund management, tax planning, trust and company management, financial advice and banking services. Rathbones also supports financial advisers in its aim to deliver positive outcomes for their clients. Rathbones manages £113.6 billion* of client assets, including £15.7 billion through its asset management arm, Rathbones Asset Management Limited. A FTSE 250 company, Rathbones employs over 3,300 professionals, including over 700 investment professionals in 21 offices across the UK and the Channel Islands, connecting its clients with high-quality, personalised wealth management services.

*As of March 31, 2026

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