Landlords would get much higher returns by investing in typical stock market portfolios than residential property, new research has shown.
Wealth and asset management firm Rathbones warns that property is no longer a reliable investment for those seeking short or mid-term growth.
During the past year, UK house price growth has continued its slump, rising just 1.7% – only half the pace of inflation – while a simple investment mix of 25% UK equities and 75% international equities increased by 11.8% before dividends. Rathbones’ report Don’t Bet the House explains that this is not a temporary 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.
Slower real income growth, higher mortgage costs, and a more demanding tax and regulatory environment around buy-to-let investments have all had an impact.
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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.
“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,” says Charlie Newsome, senior investment director. “Right now, residential property isn’t seen as a driver of wealth for later life and retirement for most people.”
Prices
Rathbones also examined house prices in the 25 local authorities in England with the highest density of second homes. It found that areas with high concentrations have also seen prices fall disproportionately, with 19 recording declines in 2025, compared to 26% nationally. This had risen to 20 of 25 by the first quarter of 2026.
The backdrop for property investors has shifted decisively, adds the firm. Mortgage rates are unlikely to return to the lows that helped fuel the boom years, real wage growth remains weak, and the tax and regulatory environment for landlords and second-home owners has become steadily more punitive. “Property will always matter to owner-occupiers. But as a route to building wealth, UK residential housing no longer looks like the compelling proposition it once did.”
