As we reach the middle of 2025, we ask the Directors of the Commercial, Land Management and Residential departments what they expect in terms of prices changes in their sectors for the rest of the year and beyond, in Yorkshire and the north.
Commercial
On the positive side the
industrial / logistics
sector has seen post pandemic yields stabilise at around 5.5% for prime industrial. Recently, there has been increased development of large distribution facilities, so over supply remains a risk for the sector. Balancing that, demand, particularly for smaller and mid-size units has remained strong, driven by the continued expansion of e-commerce and the need for local, regional and national delivery hubs. As supply remains limited in prime locations, over the last 2 years, we have seen rental growth levels at around 5-10% per annum in the region.
Retail
, however, continues to face significant headwinds. Town centres such as Harrogate and Ripon have seen declining footfall, reflecting changing consumer habits, competition from online retail, and rising operational costs. While some high streets are adapting with a greater focus on leisure and hospitality, secondary retail locations are struggling with yields moving further and further out (12% to c.14% with rents falling). That said, convenience retail and mixed-use schemes still attract significant investor interest in more resilient centres such as in York with prime yields remaining stable at 5.25-5.5% for supermarkets and convenience stores.
Since the pandemic,
offices
have seen the most obvious user shifts with people working from home and the advent of widespread flexi-working. This is starting to change as employers seek to encourage their people to return to the office to increase cross selling within their businesses, promote internal efficiencies and learning from their peers face to face. This has led to a strengthening in sentiment towards the sector, but yields remain steady in Leeds and Manchester at c.6.5%. Counter balancing that is increased supply which has led to a c.10% drop in rents.
Edgar Seligman comments:
“Generally, the commercial real estate sector has experienced a tough period over the last 2 years, with low growth in rents and capital values alike. The market is heavily influenced by interest rates and the slower than anticipated reduction in the basic rate has led to lower volumes of transactions across the northern region. However, the industrial sector has performed strongly, and investors have seen good overall returns.”
“Looking ahead, we expect recent trends to continue in the face of geo-political and economic uncertainty for the UK and interest rates. However, this presents significant opportunities to investors looking for value – particularly for well-located offices and retail assets where long term investors can take advantage of current weaknesses in the sector. Industrial property will remain the investment of choice given the sound fundamentals and supply / demand imbalance delivering sustained rental growth. As ever, location is key to investment performance, whatever the sector.”
Land values
Over the last 4 years, we have seen a steady increase in land prices in the North of England however we have recently seen a reduction in this growth. This is predominantly as a result of government policy, fiscal reviews and the introduction of the ‘Family Farm Tax’. Per acre, since 2020, average arable land has increased from £8,600 to £10,000 today; grade 3 pasture has increased from £5,500 to £7,000; grazing land below the moorland line has increased from £4,000 to £5,500. Having analysed the most recent land sales data, growth has slowed. 2024 saw very little or no growth across the region.
Blair Wallace comments;
“The deceleration of land prices across the region is unsurprising. April 2026 saw the introduction of significant Inheritance Tax changes effecting agricultural property with a relatively low value threshold of £1million now facing a 20% tax. That combined with the ever-increasing input costs and National Insurance Contributions has led farming businesses to seriously consider where their future lies and we have already seen an increased number of land and farms come to the market than in previous years. Whilst the recent government Spending Review announces a £2.7billion commitment to farming and nature recovery, within this is a £100million cut to farming and countryside programmes overall. These include SFI, Countryside Stewardship, Landscape Recovery and capital grant funding. The NFU President, Tom Bradshaw, commented that this means ‘farmers and growers will need to do more with less’.”
He continues;
“However, despite the headwinds within the industry, farmland in the north continues to attract buyers and competition from others and ensures relatively strong prices are still being achieved. Smaller parcels of land and those parcels that adjoin wealthy neighbours looking to extend an existing enterprise, are still consistently reaching values well above average. Similarly, if there is any opportunity for long term development or land banking, very strong prices are being recorded. Although this is positive news given the uncertainty that the industry faces, it is unlikely that land values will increase further throughout the year. Landowners and farmers should take stock, review their business and succession planning, and consider the changes on the horizon sooner rather than later.”
Residential
Our recent house price index for the county showed stark variances across the region. York and Bedale continue to perform well with Harrogate and surrounds performing poorly. Currently the market up to £1m is remaining active with transaction numbers holding up. Above £1m, the best houses in the best locations are attracting plenty of buyers but those with any form of obvious issue, especially an over optimistic guide price, are not selling well. Prices are currently flat with no parts of the county seeing stark increases or reductions.
For the rest of the year and into 2026, two main factors remain the controlling forces. First is interest rates. If rates continue to fall, we expect prices to see a small upturn. Mortgages at just under 4% are now available in the market and if they reduce further that will increase buyer numbers and provide some much needed liquidity. Second is the cost of moving house, specifically stamp duty. At £2m, a buyer has to pay £151,250 in stamp duty, or £211,250 if the house is a second home. This is making buyers re-address their priorities and the decision to move house is only made if absolutely essential.
Director, Toby Milbank comments,
“If the government wants to free up the housing market, we have long been advocates of the idea of splitting the stamp duty equally between buyer and seller. Without any further help to buy schemes or stamp duty reductions or holidays, house prices are likely to stay flat for the next 12 months.”
