Residential property is no longer viewed as a driver of wealth for later life and retirement, says Rathbones.
Analysis by the wealth manager found UK houses lost value in real terms in 2025 and significantly underperformed equities.
Over the past year, UK house price growth has risen just 1.7%, only half the pace of inflation. In comparison, an investment mix of 25% UK equities and 75% international equities rose by 11.8% before dividends.
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.
Rathbones said London has been particularly affected, with house prices falling in 17 of the 32 boroughs in 2025.
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. 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 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.
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