UK house prices to rise by 24.5% over the next five years: property group
Property group Savills has published its revised forecasts for UK house prices leading up to 2030.
Annual house price growth has slowed to 2.1% in the year to June, according to Nationwide, down from a rate of 4.7% in December 2024. Monthly readings of the index so far this year have been volatile, with positive growth in January, February, and May, but falls in the other three months.
In light of this cautious start to the year, and the potential for more buyer jitters in the run-up to the Autumn Budget, given the state of public finances, Savills has revised its UK forecast for 2025 down to 1%.
“Against this backdrop, we expect concerns over the prospect of future tax increases to weigh most heavily on the top end of the market.
“However, there are reasons to have confidence in the wider market picking up the pace over the remainder of the forecast period. Oxford Economics forecast cuts to the base rate totalling 175bps by the end of 2027, which will result in steadily improving mortgage affordability.
More borrowing capacity has also been created through the more relaxed approach to mortgage regulation, including the application of the affordability stress tests, and the Bank of England also allowing individual lenders to have more than 15% of their loan book above an LTI ratio of 4.5, the group said.
“Both of these measures are likely to boost transaction volumes, as the hurdle of saving for a deposit faced by many first time buyers will be reduced.”
Looking forward, Savills forecasts further growth of :
- 4% in 2026;
- 6% in 2027;
- 6% in 2028;
- 5.5% in 2029.
This would bring total house price growth over the five-year period to 24.5%.
Stamp duty
Understanding the relative strength of the housing market in 2025 has been complicated by the changes in buyer behaviour prompted by Stamp Duty changes, Savills said.
“Underestimate a Brit’s love for a tax saving at your peril. Transactions boomed in early 2025 as buyers rushed to beat the deadline – in fact, March saw the second-highest number of sales in a month since 2006.
“Following this rush, completed transactions were then unsurprisingly down in April on normal levels. Volumes picked up in May, but were still 16% lower than the 2017-19 average for the month.”
Previous analysis by the group shows it typically takes 2-3 months for the market to fully adjust to SDLT changes, so it won’t be clear until later in the summer whether we are following this typical pattern, or if the fall in transactions is indicative of broader market weakness.
