House prices in the UK are projected to grow significantly, affecting future homeowners and the economy.
- Savills forecasts a 23.4% increase in house prices by 2029, suggesting potential economic stability.
- The North will experience the most rapid growth, with projections up to 29% over five years.
- Falling mortgage rates and inflation at the target mark improve buyer confidence.
- Transaction levels will stay below pre-pandemic averages, with uneven recovery across regions.
House prices across the UK are set for a considerable rise, as projected by Savills, indicating a possible economic upturn. The forecast predicts a 23.4% increase in house prices by 2029. This projection comes amid a backdrop of inflation stabilising at the 2% target and declining interest rates, fostering conditions conducive to consistent year-on-year growth.
The regions expected to benefit most from this growth trend are in the North, where housing affordability and market cycle positioning allow for substantial price hikes. Savills anticipates growth in the North to reach between 28% and 29% by 2029, outpacing the more constrained growth in London and the South, which face greater affordability challenges.
The housing market dynamics are also influenced by recent changes in mortgage costs. As monthly mortgage costs decrease, prospective buyers are showing enhanced confidence. This improved sentiment is crucial, per Lucian Cook of Savills, who notes the importance of mortgage rate directions in shaping buyer decisions in recent years.
Transaction volumes, however, are not expected to reach pre-pandemic peaks. Although recovery is underway, the levels will remain slightly below those averages, with transactions peaking at around 1,150,000 by 2028. The recovery is expected to be uneven, impacted by regional variations and changes in property taxation, which may cause short-term disruptions.
Savills’ research highlights that the North and Scotland are positioned advantageously due to lower mortgage pressures, while areas like London are constrained by higher borrowing requirements relative to income. The anticipated reduction in homeworking and a pivot back to commuter hubs may bolster growth in regions surrounding major cities, yet affordability will remain a challenging factor.
The UK housing market is on a trajectory of significant growth, driven by economic factors and regional dynamics.
