Expectations for house price growth in 2025 have been dialled back, with global economic concerns and political uncertainty impacting the property market’s performance in the first half of the year. This is according to the latest forecast released by property experts Savills.
Despite the short-term slowdown, Savills has revised its long-term outlook positively. The firm now predicts a stronger rise in house prices over the next five years, citing recent changes to mortgage affordability rules as a key factor that could support the market moving forward.
According to the updated forecast, average house prices across Britain are expected to grow by 1% this year, which is a drop from Savills’ previous estimate of 4%. However, over the five-year period to 2029, prices are now projected to increase by 24.5%, up slightly from the earlier forecast of 23.4%.
The start of 2025 was weaker than anticipated, partly due to wider global issues such as trade tensions and shifting economic conditions. These uncertainties have made the direction of interest rate cuts harder to predict, which in turn has influenced buyer confidence and market activity.
In addition to global instability, the UK property market has been affected by changes in stamp duty. At the beginning of the year, many buyers rushed to complete transactions before adjustments to stamp duty thresholds came into effect, which caused a temporary surge in sales.
Stamp duty applies to property purchases in England and Northern Ireland, and this short-lived rush was followed by a quieter period as the market adjusted. Despite these fluctuations, Savills remains cautiously optimistic about the months ahead.
A major reason for this optimism is the shift in how mortgage lenders are approaching affordability checks. Many lenders have relaxed their criteria, allowing borrowers to access higher loan amounts relative to their income.
Savills notes that these looser regulations – including more flexible stress tests and greater acceptance of loans above 4.5 times income – will likely help boost the number of house sales. This is especially encouraging news for first-time buyers who have previously struggled to meet stringent lending requirements.
Under the revised forecast, the average house price is expected to rise by £86,300 by the year 2029. This would take the average price from £362,300 in mid-2025 to an estimated £448,600 by the end of 2029.
Lucian Cook, Head of Residential Research at Savills, pointed out that while interest rates have started to come down as expected, recent events have made it more difficult to anticipate how much further they will fall in the near future.
Cook explained that the changing geopolitical landscape, including new tariffs and trade-related issues, has added layers of complexity to the UK’s economic outlook. These developments could have knock-on effects for buyer confidence and investor activity.
Another concern is the possibility of future tax rises, which may dampen demand at the higher end of the housing market. Wealthier buyers might choose to delay their purchases if they suspect that tax burdens will increase in the coming years.
Still, the easing of mortgage rules is expected to give the overall market a welcome lift. In particular, it could help more first-time buyers step onto the property ladder, which would in turn support stronger transaction volumes and increased market activity.
Savills has forecast that around 1.04 million house sales will take place by the end of 2025, a figure that aligns with their previous projections. While high levels of housing supply may limit how much prices can rise, the firm maintains a broadly positive view of the market’s direction.
Emily Williams, Director of Research at Savills, said that buyer demand is likely to increase as we move into early autumn. She expects the mortgage market to become more competitive, especially if the Bank of England cuts its base rate in August as many analysts predict.
The forecast from Savills was informed by data from the Land Registry and Nationwide Building Society, providing a robust foundation for their predictions.
Here’s a breakdown of Savills’ regional house price growth forecasts for the five-year period from 2025 to 2029:
- North West: 31.2%
- Scotland: 29.4%
- Wales: 28.2%
- Yorkshire and the Humber: 28.2%
- West Midlands: 27.6%
- North East: 26.4%
- South East: 20.4%
- South West: 20.4%
- East Midlands: 20.3%
- East of England: 19.2%
- London: 15.3%
These figures suggest that the north of England and devolved nations like Scotland and Wales could see the strongest growth, while London is predicted to have the slowest pace of price increases.
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