The predicted increase in UK house prices is making headlines, with forecasters anticipating a significant jump in the average property value over the next five years. According to Savills, the average house price across Britain is expected to rise by 23.4%, which amounts to a whopping £84,000 increase.
Currently, the typical property value stands at £358,000, but Savills projects it to reach £442,000 by the end of the five-year period to 2029. This translates to an average annual increase of 4%, or £14,500, in the coming year alone. These predictions are based on mainstream house prices that cover the majority of the housing market, taking into account both second-hand and new-build properties.
Various regions across the UK are expected to experience different levels of house price growth over the next five years. The North West leads the way with a predicted increase of 29.4%, followed closely by the North East and Yorkshire and the Humber, both at 28.2%. On the other hand, London is expected to see a more moderate increase of 17.1%.
Lucian Cook, head of residential research at Savills, explains that the direction of mortgage rates has played a significant role in influencing buyer decisions in recent years. Lower monthly mortgage costs have boosted confidence among prospective buyers, leading to the gradual house price growth observed in recent months. Cook also notes that affordability is improving, which is expected to drive further momentum in house price growth in the coming years.
Emily Williams, director of research at Savills, highlights some key factors that could impact the housing market in the near future. Home-movers may delay their plans until mortgage rates stabilize in 2027, potentially leading to a surge in activity among second- and third-steppers later on. However, the number of first-time buyers entering the market is likely to remain below pre-pandemic levels due to the absence of government support like Help to Buy.
Moreover, increased regulation in the rental sector and additional surcharges for second home purchases could further impact demand from investors. Williams also points out that factors like the return to commuter hotspots near major employment hubs and affordability constraints will influence regional house price growth beyond 2025.
In conclusion, the forecasted increase in UK house prices presents both challenges and opportunities for buyers and investors alike. While the market is expected to experience growth in the coming years, factors like mortgage rates, affordability, and government policies will play a crucial role in shaping the future of the housing sector.