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UK House Prices Expected to Rise Modestly in 2025
The UK housing market is expected to see a modest increase in house prices by around 1% in 2025, according to major property analysts such as Zoopla, Savills, and Rightmove. This forecast is a slight adjustment from earlier predictions of higher growth rates.
As of May 2025, the average UK house price stands at approximately £268,400 to £269,000, reflecting a 1.4% annual increase from the previous year. However, growth has slowed compared to earlier forecasts. For instance, Savills revised its 2025 growth prediction down from 4% to about 1%, citing reduced buyer activity despite improving affordability.
Different property types show varied trends. Terraces and semi-detached homes have seen price increases of around 2-2.5%, while flats saw slight price declines over the last year.
Looking ahead, Savills anticipates more substantial growth, estimating average UK house prices could rise by about 24.5% from 2025 through 2029. The recent slowdown is linked to broader factors such as inflation, mortgage rate increases, and economic uncertainty impacting buyer sentiment.
In terms of regional divisions, the north west of England is where property prices are growing fastest, up 4.4% over the past year to an average of £241,938. House prices in Scotland are also growing quickly, with an annual growth of 4.9%, making the average home in Scotland now cost £214,891.
However, growth in London, the most expensive part of the UK, has been much more subdued, with the average house now costing £540,048, an increase of only 0.6% compared to the previous year. The south west also saw a modest increase of 0.5%.
In contrast, house prices in Northern Ireland are enjoying the fastest growth in the UK, with an annual growth of 9.6%, making the average home in Northern Ireland now cost £212,189. In Wales, average property prices have grown by 4.4% in the last year, reaching £241,938.
Property transactions and mortgage approvals have increased significantly in May compared to April. Property transactions increased by 25% according to HMRC, while mortgage approvals increased by 4% according to the Bank of England.
The drop in house prices in June was compared to the previous month and the previous quarter. This could be due to the usual seasonal slowdown in the housing market during the summer months.
Recent regulatory guidance has taken a more flexible approach to affordability assessments, helping the housing market. Additionally, the return of first-time buyers to pre-stamp duty change levels has also contributed to the housing market's improvement.
Mortgage rates are at their lowest level since 2023, according to some expectations, which could further stimulate the housing market in the coming months. However, the Bank of England is expected to cut rates again this year, which could impact mortgage rates and house prices.
In summary, while house prices in the UK will rise modestly (around 1%) in 2025, growth is expected to be subdued this year relative to earlier optimism but could strengthen in the following years.
Investors interested in real-estate may want to consider the UK market, as house prices are predicted to increase by around 1% in 2025. This growth could be influenced by the current reduction in mortgage rates, which could further stimulate the housing market in the coming months.
Finance experts suggest keeping an eye on managing risks when investing in UK property, as factors such as inflation, economic uncertainty, and improved affordability assessments play significant roles in shaping the market.
