UK house prices set to soar by '25 per cent’ over the next five years
6 November 2024, 12:49 | Updated: 6 November 2024, 12:59
UK house prices will rise by almost 25 per cent over the next five years, a leading UK estate agent has said.
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The rapid rise in prices is set to coincide with mortgage rates continuing to fall, with Savills estate agents predicting house prices will increase 4 per cent (or £14,500) in 2025 alone.
The latest figures released by the high street agent forecast growth of around £84,000 between now until 2029.
That figure equates to a rise of 23.4 per cent over five years.
It is also forecast that house prices are set to return to levels seen before the volatility of the 2022 mini budget.
“With less external noise, house prices in the medium term will be dictated by the fundamentals of demand, supply and affordability,” says Lucian Cook, head of residential research at Savills.
The estate agent suggests this rise will primarily be down to lower inflation and a forecast decrease in interest rates.
It follows interest rates dropping earlier this year, as inflation hit the government's two per cent target.
“The direction of mortgage rates has been key to buyer decisions over the past two years, and decreased monthly mortgage costs are now feeding through into improved confidence amongst prospective buyers,” Lucian Cook continued.
The forecast was revised from figures released earlier this year, with Savills initial forecast for 2025 suggesting prices could rise by 3.5 per cent.
The five year forecast was also upped from an initial prediction of 21.6 per cent.
“A steady improvement in affordability should allow for house-price growth to gain momentum over the next couple of years. But there is still some potential for a bumpy ride," Cook added.
“The market will remain sensitive to short-term fluctuations in the cost of debt.”
