Prediction suggests that by the year 2025, average house prices might exceed £300,000.
The UK housing market is set to experience a modest growth in 2025, according to the latest forecasts. The average cost of a property in the UK is predicted to rise, with experts attributing this growth to improving economic fundamentals and falling mortgage rates.
As of May 2025, the average UK house price stands at £268,400, reflecting a 1.4% increase compared to a year earlier. This growth is expected to continue, with experts predicting UK house prices to increase by 3-4% in 2025. If this forecast becomes reality, the average cost of a property in the UK would reach £292,000.
Savills, a leading real estate advisor, has forecasted annual UK house price growth in the range of 2.5% to 5.0% from 2024 through to 2028. This implies an average UK house price rising from around £285,000 in 2024 to approximately £316,000 by 2027.
Experts attribute this growth to continued mortgage cost reductions and steady transaction volumes. The Bank of England has cut the base rate multiple times, reaching 4.25% by mid-2025, supporting the housing market and buyer activity.
Regional variations exist, with London typically underperforming relative to the national average due to affordability constraints and weaker recent performance.
Looking ahead, the market is expected to continue improving from the ground made in 2024, according to Thomas Cantor, co-head of short-term finance at West One Loans.
In the current market, specialist lenders have seen an increase in demand from clients looking to capitalize on the growing opportunities. Many clients who have been dormant for the last couple of years are now utilizing specialist lenders to help them remain agile and capitalize on opportunities in a market where demand is increasing daily.
The ability of specialist lenders to allow developers to utilize their services during multiple stages of the journey has been vital in the current market. This has been particularly evident in the construction of 200 affordable homes in Harrogate, UK, where funding has been secured.
However, the slowdown in demand for new-build homes has resulted in developers having a great deal of equity tied up in existing developments. This equity tied up has prevented developers from pushing forward on their next project.
Despite some forecasts pointing to a slight price decrease in 2024, the overall medium-term outlook is cautiously optimistic with moderate annual growth averaging around 2.7% from 2024 to 2028. This suggests a steady but not overheated housing market in the UK throughout 2025, with affordability and regional disparities continuing to influence local performance.
- The moderately optimistic outlook for the UK housing market in 2025, with an anticipated 3-4% increase in property prices, presents opportunities for investing in real estate.
- Financial institutions, such as specialist lenders, have seen an increase in demand from clients in the UK seeking to capitalize on the housing market growth by utilizing their services for various stages of the property development process.
