A forecast indicates a substantial rise in UK house prices over the next five years.
- UK house prices are expected to grow by an average of £84,000 by 2029, according to Savills.
- Falling interest rates and stabilised inflation are set to support a 4% price rise next year.
- The market will experience a total growth of 23.4% by 2029, bolstered by increased buyer confidence.
- Regional variances could see the North West leading with growth rates of up to 29.4%.
UK house prices are poised for notable growth over the coming years, with Savills forecasting an average increase of £84,000 by 2029. Falling interest rates and stabilising inflation are expected to bolster this growth, enabling a 4% rise in the forthcoming year. By the end of the decade, the market could see a total growth of 23.4%, driven by renewed confidence among buyers as affordability improves.
Savills’ five-year forecast predicts a resurgence in house prices, beginning with a 4% growth rate in 2025 as inflation eases to 2% and interest rates drop. The average property price is anticipated to climb from £358,000 in 2024 to £442,000 by 2029, aided by more competitive mortgage rates. The current base rate of 4.75% is projected to decline to 2% by 2027, with average mortgage rates similarly falling from 4.56% to 2.64%.
According to Lucian Cook, Savills’ head of residential research, the reduction in mortgage rates has been pivotal in boosting buyer confidence. Lower monthly costs are enticing more prospective buyers, although potential short-term fluctuations in debt costs and property tax changes may introduce some volatility in price trends. Home mover activity is set to rebound, possibly reaching 1.15 million transactions by 2028, although this recovery will not be uniform across all regions or demographics.
Second- and third-time movers are expected to play a significant role in this recovery, particularly in later years, as they benefit from accumulated home equity and favourable borrowing rates. Conversely, first-time buyer levels may linger below pre-pandemic averages due to reduced government support and stricter regulations affecting rental and buy-to-let markets.
Regionally, more affordable areas such as the North and Scotland are forecast to experience faster growth, with the North West potentially leading at 29.4% over five years. In contrast, higher-cost areas, including London and the South East, are projected to see more modest gains of around 17%, as affordability constraints limit growth despite declining rates. By 2025, these regional disparities are expected to stabilise, with demand reflecting local affordability and market conditions.
These projections come after a 10.5% real-term decrease in house prices since their peak in August 2022, as inflation and rate hikes curtailed buyer activity. However, as inflation begins to normalise, Savills anticipates a five-year return to growth, with an 11% real appreciation in house prices, helping them recover to pre-mini-budget levels.
The UK housing market is on a promising path to recovery, with significant price growth expected over the next five years.
