Average house price to increase by 24.5% over the next five-years
Savills has launched a revised five-year mainstream house price forecast in light of a more cautious start of the year.
While the overall five-year outlook remains intact – the distribution of growth has shifted due to more delicately balanced market conditions.
Savills has revised its UK forecast for 2025 down to 1.0% (from 4%), while medium-term prospects have been upgraded due to a more relaxed approach to mortgage affordability tests, which should support both house prices and the number of transactions.
Overall, Savills expects house price growth to total 24.5% by the end of the five years to 2029, adding an extra £86,300 onto the average house price.
Figure 1 Revised five-year mainstream forecast 2025-2029
| 2025 | 2026 | 2027 | 2028 | 2029 | Five year Total |
Average UK house price growth | 1.0% | 4.0% | 6.0% | 6.0% | 5.5% | 24.5% |
Previous forecast | 4.0% | 5.5% | 5.0% | 4.0% | 3.0% | 23.4% |
UK residential transactions | 1.04m | 1.15m | 1.18m | 1.19m | 1.18m | – |
Year-end Bank base rate | 3.75% | 3.00% | 2.50% | 2.50% | 2.50% | – |
Real GDP growth | 1.2% | 1.0% | 1.6% | 1.9% | 1.7% | 7.6% |
Source: Savills Research, Oxford Economics
* Five-year figures represent total growth over the forecast period (including compounding), so are higher than the sum of the individual annual growth rates
An ever-changing picture
“Interest rates have fallen as expected, giving buyers a bit more financial capacity than they had a year ago. But a lot has changed over the last six months. Greater geopolitical uncertainty – including tariffs and trade wars – has made predicting the precise path of further cuts more challenging,” comments Lucian Cook, head of residential research at Savills.
“The last three months have been marked by a lack of buyer activity, despite improving affordability, and annual house price growth slowed to 2.1% in the year to June, according to Nationwide (down from 4.7% in December 2024). In light of this and the potential for more buyer uncertainty in the run up to the Autumn Budget, we have revised our house price forecast for this year”.
Against this backdrop, Savills expects concerns over the prospect of future tax increases to weigh most heavily on the top end of the market.
But there is reason to have confidence in the wider market over the remainder of the forecast period, says Savills, as the five-year forecast figure is upgraded to 24.5%.
“Recent easing of mortgage regulations, including more flexibility on affordability stress tests and higher allowances for loans above 4.5 times income, is likely to boost transaction volumes, particularly by helping more first-time buyers get on the ladder. As a result, we expect that by 2027, transaction numbers will approach the post-GFC norm of 1.2 million per year,” continues Lucian Cook.
Figure 2 Revised five year regional forecast 2025-2029
2025 | 2026 | 2027 | 2028 | 2029 | Five year total | |
North West | 2.5% | 5.0% | 7.0% | 7.0% | 6.5% | 31.2% |
Scotland | 2.5% | 5.5% | 6.5% | 6.5% | 5.5% | 29.4% |
Wales | 3.0% | 5.5% | 6.0% | 6.0% | 5.0% | 28.2% |
Yorkshire and The Humber | 2.0% | 4.5% | 6.5% | 6.5% | 6.0% | 28.2% |
West Midlands | 2.5% | 5.0% | 6.0% | 6.0% | 5.5% | 27.6% |
North East | 2.0% | 4.5% | 6.0% | 6.0% | 5.5% | 26.4% |
UK | 1.0% | 4.0% | 6.0% | 6.0% | 5.5% | 24.5% |
South East | 1.0% | 3.5% | 5.0% | 5.0% | 4.5% | 20.4% |
South West | 0.0% | 3.0% | 5.0% | 5.5% | 5.5% | 20.4% |
East Midlands | -1.0% | 3.5% | 5.5% | 6.0% | 5.0% | 20.3% |
East of England | -1.0% | 3.0% | 5.5% | 5.5% | 5.0% | 19.2% |
London | 0.0% | 2.5% | 4.5% | 4.0% | 3.5% | 15.3% |
Source: Savills Research
* Five-year figures represent total growth over the forecast period (including compounding), so are higher than the sum of the individual annual growth rates
Key drivers behind short term revisions
Market activity in 2025 has been complicated by how buyers reacted to Stamp Duty changes. A surge in activity at the start of the year culminated in March seeing the second-highest monthly sales volume since 2006, as buyers rushed to beat the deadline.
However, this momentum was followed by a sharp rebalancing, as new buyer enquiries plummeted to their lowest level since September 2023 (net balance of -32), according to RICS. While a dip was anticipated, the scale of the decline outpaced the earlier surge. But encouragingly, demand turned positive in June (+3) after four consecutive months of decline.
Meanwhile, supply has remained consistently positive in 2025, hitting +7 in May, but sales agreed are still low (-28). This imbalance led to a 0.5% dip in Q2, reflecting a high level of unsold homes on the market.
“We anticipate that buyer demand will pick up heading into early autumn, particularly among first-time buyers and mortgaged home movers, driven by an expected base rate cut in August and a more competitive mortgage market,” said Emily Williams, director of research at Savills. “Consumer confidence in June was the joint highest since last summer, and mortgage rates remain at their lowest for a while.”
Total transactions are projected to reach 1.04 million by year-end, in line with previous forecasts. While elevated supply levels may temper price growth, Savills maintains a positive outlook for 2025 overall despite the slow start.
Greater capacity for growth beyond 2025
Beyond next year, house price growth will be determined by affordability, says Savills.
“Falling interest rates in combination with relaxation around affordability tests will open up greater capacity for house price growth than would otherwise be the case, ultimately leading to a higher transaction market,” says Dan Hill, research analyst at Savills.
“We expect this to offset the weaker economic outlook over the forecast period, albeit the softened prospects for economic growth will temper homebuyers appetite to stretch themselves much further.
However, recent experience tells us that the path of interest rates is often winding and uneven, and we should therefore still treat the outlook with caution.
“Higher than expected inflation in the UK is making policymakers cautious when it comes to further base rate cuts. While we have forecast based on the scenario described, there are ongoing risks in both directions which have the potential to disrupt the housing market,” concludes Dan Hill.