CBRE has released its 2025 UK Real Estate Market Outlook Mid-Year Review, in which they look back and evaluate their expectations for 2025, made at the turn of the year.
At the outset of the year, the economic environment had begun to stabilise, and inflationary pressures had reduced. Last year’s General Election and Budget announcements set new agendas for the UK and established certainty and focus for the year ahead.
2025 is still set to be a key year for the living sector. The Government’s pledges to boost supply are now translating into action, showing that they are committed to fixing the country’s housing crisis.
This will be hugely positive for the living spectrum, with investment across sectors including purpose-built student accommodation (PBSA), Build to Rent and affordable housing expected to be strong.
In January, investment was expected to be stronger in 2025 in the PBSA and Build to Rent sectors, as the supply and demand imbalance persisted. This would underpin robust rent growth, but the pace of growth will continue to decelerate, reflecting broader inflation and the stretched affordability of tenants.
CBRE’s mid-year review calculated that living investment totalled £4.3bn in H1 2025, 30% below the same period of 2024. However, CBRE now expects broader living investment to be 7% lower than last year at £10.3bn.
The supply and demand imbalance persists though, with new regulation driving some landlords out. Several factors, including higher construction and debt costs, planning delays, and new building safety regulations means the viability of PBSA development is also still challenging.
Rents have increased by 2.1% in the first half of 2025, a deceleration from the 4.4% recorded over the same period last year. Rents look set to perform in line with their January forecast.
