The property market in 2025 is poised for another challenging year, as affordability continues to be a significant concern. House prices across the UK remain under pressure due to higher mortgage costs, impacting buyers and sellers alike.
Estate agent Savills has projected a 4% average increase in property prices across the UK for 2025. In comparison, Knight Frank offers a more modest prediction of a 2.5% rise. These varying forecasts reflect differing perspectives on how the market will navigate the ongoing economic pressures.
Knight Frank points out that the more affordable markets in the north of the UK are expected to see the strongest house price growth in the coming years. This includes regions such as the North West, North East, Yorkshire and the Humber, as well as Scotland, all of which are predicted to experience a 5% rise in house prices by 2025. These areas are anticipated to benefit from relatively lower property prices compared to the South, making them attractive options for buyers seeking affordability, even in the face of rising mortgage costs.
In stark contrast, the South of England is expected to see much lower growth in house prices. The South West and East of England are predicted to see price increases of just 2.5%, reflecting the ongoing affordability challenges faced by many buyers in these areas. London and the South East, while expected to see slight improvements, are forecast to experience only marginal growth, with house prices rising by approximately 3%. These regions are likely to face continued pressure due to high property prices and relatively stagnant wage growth, making it harder for many potential buyers to enter the market.
Outstanding areas for state education
Starting from 1 January, the Labour government’s decision to introduce VAT on school fees has raised the cost of private schooling by 20%. This significant increase is already influencing the property market, with many buyers now turning their attention to areas with exceptional state schools as a way to reduce educational expenses.
Sarah Walker, an independent estate agent in Richmond, notes that the rise in VAT is already having a noticeable impact: “The increase in VAT on private school fees is already making waves in the property market. Families looking to offset costs are beginning to downsize or relocate to areas with outstanding state schools.” This shift is expected to create a rise in demand for properties within catchment areas of top-performing state schools, potentially driving up both competition and property prices in these regions.
The North
As many buyers and renters are increasingly priced out of the South and South East, the North of the UK presents an attractive option, offering excellent value for money. Whether you’re a landlord or an owner-occupier, the North provides a wealth of opportunities.
Sarah Walker comments on the situation, saying, “The North remains a goldmine for value in 2025.” She highlights that cities like Manchester and Leeds are continuing to offer strong rental yields, making them ideal locations for investors. Furthermore, surrounding areas such as Bolton and Huddersfield offer relatively affordable property prices, with the potential for significant capital growth in the future. This combination of affordability and investment potential is driving interest in the North, particularly for those looking for more value in their property ventures.
Commuter towns
Commuter towns across the UK are expected to be a popular choice in 2025, whether you’re in the North or South. These towns offer a compelling mix of local amenities, spacious homes, and excellent transport links, making them an attractive option for buyers looking for convenience and comfort.
Sarah Walker explains the appeal of commuter towns, noting that areas such as Reading, Slough, and Basingstoke are witnessing increased demand as more workers transition back to hybrid or full-time office roles. This shift is driving the demand for homes in these areas. “They’re benefiting from the post-pandemic hybrid work model, which allows buyers to live further out without sacrificing job access,” Walker says.
In addition to commuter towns, suburbs are also seeing growing demand, especially for family homes. Prices in these areas are rising, particularly where schools and local amenities are of high quality.
Mark Crampton from Middleton Advisors also expects certain towns and cities to be particularly popular in 2025. He points to smart, walkable locations like Bath, Norwich, Guildford, and Petersfield, all of which offer good amenities and a high quality of life, making them ideal choices for prospective buyers in the coming year.
London hotspots
In London, new hotspots are emerging as areas just outside the traditionally prime locations are seeing significant development and regeneration. Marc Schneiderman of Arlington Residential points to Kentish Town as a prime example, suggesting that it will experience substantial growth in the coming years. “There is significant development and regeneration in the planning pipeline, and it is close to prime/established locations such as Hampstead and Primrose Hill,” he says.
In East London, areas like Stoke Newington (N16), Finsbury Park (N4), and Lower Clapton (E5) are expected to show the largest margins for growth, according to Oliver Sanhaji of Middleton Advisors. These areas, once overlooked, are becoming increasingly desirable due to their growing appeal and accessibility.
Additionally, Sarah Walker predicts that areas in outer London, such as Croydon and Enfield, may surprise buyers with a combination of affordability and excellent transport links. Though not considered “cheap,” Richmond upon Thames remains a strong contender for long-term returns, as buyers increasingly value green spaces and the overall quality of life it offers.
Well-connected areas in the country
The countryside, which saw a surge in popularity during the pandemic, has lost some of its appeal in the current market. Rising interest rates have made larger, high-maintenance rural properties less attractive to buyers. However, according to Sarah Walker, well-connected rural locations and small market towns continue to offer excellent opportunities, provided you know where to look.
Mark Crampton, of Middleton Advisors, highlights several areas that remain highly desirable for those seeking more space but still needing easy access to London. He points to locations such as Maidenhead, Farnham, Guildford, Dorking, and Sevenoaks. “Houses in the countryside always look good value when compared to London prices,” Crampton explains. He believes that family homes within 40 to 50 minutes of London, especially those close to train stations, present a strong medium-to-long-term investment opportunity.
The Southwest
Despite the figures from Savills, many experts still see the South West as a region with strong potential. While it has long been hindered by poor connectivity, this can actually work in favour of buyers who don’t need to commute, as it offers much more for your money.
According to Dennington, “Parts of the South West offer excellent value, particularly in Devon and Cornwall, where there is strong demand.” These areas remain attractive for those seeking a more affordable lifestyle without sacrificing quality.
However, Walker notes that the market in this region isn’t entirely typical of the rest of the country. She points out that restrictions on second homes have had a significant impact. “Cornwall and Devon are still holding appeal for second-home buyers, though the market there is cooling slightly due to tighter regulations on holiday lets.” This shift in regulation is causing some changes in the dynamics of the market, but the appeal of these areas remains.
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