UK House Prices Forecast – Should You Buy or Wait?
- 03/04/2025
- News
Housing market in the UK has always been a topic of interest for buyers, sellers and investors. Due to the fluctuating prices of property and certain economic uncertainty, a question always arises in common people’s mind that whether they should buy a home now or wait for better opportunity? Let’s explore the latest trends, expert’s predictions and other key factors that will influence hose prices in 2025 and beyond.
Current State of the UK Housing Market
In 2024, UK house prices demonstrated resilience, with an overall increase of 4.7% compared to December 2023. Buyer’s behaviour, changes in policy and overall economic condition influencing the housing market a lot.
House Price Trends
In February house prices experienced a modest increase of 0.4%, leading to an annual growth rate of 3.9%. As of March 2025, the UK housing market exhibits a blend of resilience and emerging challenges.
Mortgage Rates
High mortgage rates in the UK significantly impact the housing market. Monthly mortgage repayments have increased due to high rate of interest which in turn declined buyer’s demand for houses. It’s very difficult for first time buyers with lower incomes as they are struggling to qualify for loans. Therefore demand for houses falls. High mortgage rate discourages home purchase and increase the demand of rental property.
UK House Prices Forecast for 2025 and Beyond
UK housing market has experienced a moderate growth in 2024. It will experience the moderate growth in this year too. But predicted decline in mortgage rates are expected to enhance buyer’s affordability and increase the presence of buyers in this market. Overall, the UK housing market is expected to experience steady growth in 2025 and the subsequent years. Savills anticipates 4% increase in average UK house prices in 2025, with a cumulative growth of 23.4% by 2029. Whereas Knight Frank forecasts a 2.5% rise in 2025.
Here are some key factors that will influence house prices in the UK.
Interest Rates: If the rate of interest remains high then mortgage affordability may continue to be a challenge. This can limit the price growth.
Economic Growth: Economic growth significantly influences house prices. Economic growth increases the employment opportunities which in turn increase the purchasing power of the people. With more disposable income, people can afford higher-priced homes. Economic expansion often results in urbanization which increases the demand for hose and pushes hose prices upwards.
Government Policies & Infrastructure Development: Both of these two have a profound impact on the home prices in the UK. For example, when SDLT is higher, demand for homes decreases, and when it is lower, demand increases. Moreover, affordable home ownership schemes of the government boost the demand and consequently house prices get increased. Likewise, when the government takes initiatives for infrastructure development, house prices surge.
Global Events & Market Uncertainty: Global events like war, pandemic, and economic recessions have a negative impact on the UK house prices. Moreover, when there is an air of uncertainty in the global markets, consumer confidence is shaken up as they developed a fear of job loss.
Overall, it is tricky to answer that whether you should wait or buy UK houses. While the first-time buyers may wait till the mortgage rates are lowered, those looking for long-term investment may think of entering the market before prices rise further. Ultimately, buyers should assess their financial stability, risk tolerance, and market conditions before making a decision.
Data Source: https://www.financialreporter.co.uk/uk-house-prices-rise-47-in-2024-nationwide.html
