Anticipated Rise in Residential Property Values by 2025
In the real estate sector, predictions for UK house price growth in 2025 present a mixed picture, with expert opinions ranging from cautious optimism to more modest forecasts.
The UK saw an annual house price growth of 3.3% as of December 2024, a slight decrease from the 4.7% recorded in November. This decrease, however, did not deter the overall resilience exhibited by the market throughout 2024, providing a strong foundation for 2025.
Amanda Bryden, head of mortgages at Halifax, reported that the housing market started the year on a steady note. The demand for mortgages in the UK has reached its highest level in over two years, returning to pre-pandemic levels. Bryden also highlighted that impending changes to Stamp Duty thresholds are providing incentives for prospective first-time buyers to enter the market.
Despite this positive outlook, affordability remains a significant challenge for many buyers, according to Marc von Grundherr. This sentiment is reflected in the market activity following the end of stamp duty allowances, which has led to price volatility and short-term declines. For instance, Nationwide reported a 0.8% monthly fall in June 2025.
Expert forecasts for 2025 show a divergence in expectations. While Knight Frank remains moderately bullish, predicting a 3.5% annual growth, Savills has substantially revised its outlook, anticipating a more modest 1% rise in house prices for the year. Savills attributes this to recent economic and geopolitical uncertainty impacting market confidence.
Regional variations are also expected in 2025. Savills forecasts stronger growth in more affordable northern regions like the North West, North East, Scotland, and Yorkshire, where growth could reach around 5%, compared to only about 2.5% growth in the East of England and the South West.
London, with its high average house price of £547,614, continues to lead the UK in this regard. House prices in Northern Ireland, on the other hand, have shown the strongest annual growth, rising by 7.4% in December 2024.
In England, the Northwest region experienced a 5.3% increase in house prices, with properties now averaging at £209,959. However, between November and December 2024, there was a marginal monthly decline in the rate of house price growth.
Despite these fluctuations, von Grundherr remains optimistic, predicting that house prices will continue to rise in 2025. Buyer demand should hold up relatively well, offering a glimmer of hope for a stable housing market in the coming year.
Employment conditions may not significantly deteriorate in the near future, providing another factor that could contribute to the resilience of the UK housing market in 2025. The Bank Rate is also likely to come down more slowly than previously predicted, which could potentially ease mortgage affordability concerns.
In conclusion, while the UK housing market faces challenges, the outlook for 2025 is not entirely grim. With regional variations and ongoing uncertainty, expert opinions remain divided, but the overall trend suggests a more modest growth compared to earlier predictions.
- The variations in expert predictions for UK house price growth in 2025 indicate a need for careful investment strategies in the housing market, considering factors like employment conditions and mortgage affordability.
- The impending changes to Stamp Duty thresholds, along with promising employment conditions and potentially slower Bank Rate increases, could encourage more investors to delve into the UK real estate sector, particularly in more affordable regions.
- As the demand for mortgages continues to rise, engaging in housing finance becomes increasingly influential in the UK's housing-market landscape, especially in light of the overall resilience exhibited by the market and the expected regional variations in house price growth for 2025.
