The bank’s latest sector plus report, covering real estate, has noted that recovery has been maintained in the UK housing market through mid-2025 even though this has been at a slower pace.

OakNorth has reached this positive conclusion given a 3.2% increase in annual house prices recorded in June, with near pre-pandemic levels being reached in sales activity.

Additionally, resilience has been registered in the BTR sector with continued interest from overseas investment.

Around 9,700 BTR units were delivered in the first half of 2025 which has pushed the total stock up to 132,000 completed homes. A further 51,000 are under construction with 110,000 in the pipeline with planning approval.

However, OakNorth did flag that there were signs of cooling rental activity with major rent indices increasing by just 2-3% year on year.

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Despite an easing of rental growth, OakNorth still forecasts BTR assets and the PRS to continue to benefit from structural tailwinds.

“With persistent supply constraints in homeownership and rising capital flows into institutional residential, BTR projects with institutional backing are expected to remain attractive,” added OakNorth in its commentary.

With regard to residential activity in general, OakNorth flagged that residential prices may continue to rise with interest rates and market sentiment supporting this market stability.

However, OakNorth is mindful of structural issues, adding: “The recovery trajectory will be constrained by affordability pressures and supply-side bottlenecks.”

Elsewhere, the report highlighted improving performance in other sectors.

UK office investment rose 24% year on year in the first half of 2025 to £5.2bn after years of decline, with robust activity identified in the industrial space.