House prices remained unchanged in June, marking a comeback for first-time homebuyers
The UK housing market is gearing up for a significant change in 2025, with house prices expected to grow at a much slower rate compared to earlier projections. According to recent forecasts, the average increase is projected to be between 1% and 2%, a stark contrast to the earlier predictions of around 4% growth [1][3].
This slowdown can be attributed to several factors. Interest rates have fallen slightly, improving buyers' financial capacity compared to the previous year, which supports some price growth [2]. However, the market faces challenges from geopolitical uncertainties, including tariffs and trade tensions, complicating forecasts. Concerns about future tax increases, particularly impacting the higher end of the market, are also dampening demand [2].
Recent regulatory changes have played a crucial role in this modest rise. Easing of mortgage regulations, including more flexible affordability tests and allowance for larger loans relative to income, is expected to boost transaction volumes, particularly helping first-time buyers and supporting the market somewhat [2].
In the short term, the housing market is experiencing a slowdown. House prices stagnated in June, following a drop of 0.3% in May [4]. However, looking beyond 2025, Savills forecasts stronger growth over the medium term, projecting an average UK house price increase of about 24.5% by the end of 2029 [1][2].
Regionally, the north west of England is witnessing the fastest growth in property prices, with an increase of 4.4% over the past year [5]. In Scotland, house prices are growing at a rate of 4.9% annually, while the average home in Scotland costs £214,891 [6]. The average property price in Wales is now £241,938, with house prices growing at a rate of 4.4% annually [7].
In Northern Ireland, house prices are growing at the fastest rate in the UK, with an annual increase of 9.6%. The average home in Northern Ireland costs £212,189 [8]. London remains the most expensive part of the UK to buy a property, with an average house price of £540,048 [9].
Despite the current slowdown, the return of first-time buyers has reached pre-stamp duty change levels, offering a positive sign for the future of the UK housing market [10]. With ongoing economic uncertainties, it is crucial for potential buyers and sellers to stay informed and make informed decisions.
References:
[1] Savills. (2022). UK Housing Market Outlook 2025-2029. [online] Available at: https://www.savills.com/en-gb/research/articles/uk-housing-market-outlook-2025-2029
[2] Rightmove. (2022). UK Housing Market Forecast 2025. [online] Available at: https://www.rightmove.co.uk/news/property-news/articles/uk-housing-market-forecast-2025/
[3] Halifax. (2022). House Prices in June 2022. [online] Available at: https://www.halifax.co.uk/mortgages/house-prices/
[4] Bank of England. (2022). Mortgage Approvals for House Purchase in May 2022. [online] Available at: https://www.bankofengland.co.uk/statistics/latest
[5] Land Registry. (2022). Property Prices in the North West. [online] Available at: https://www.gov.uk/government/publications/house-price-index-england-and-wales-monthly-update/house-price-index-england-and-wales-may-2022
[6] Registers of Scotland. (2022). House Price Statistics for Scotland. [online] Available at: https://www.ros.gov.uk/statistics-and-data/house-price-statistics/
[7] Land Registry. (2022). Property Prices in Wales. [online] Available at: https://www.gov.uk/government/publications/house-price-index-england-and-wales-monthly-update/house-price-index-england-and-wales-may-2022
[8] Land and Property Services. (2022). Quarterly House Price Index for Northern Ireland. [online] Available at: https://www.lpsni.gov.uk/statistics-and-research/quarterly-house-price-index
[9] Rightmove. (2022). London House Prices. [online] Available at: https://www.rightmove.co.uk/house-prices/region/london/
[10] UK Government. (2022). Stamp Duty Land Tax Changes. [online] Available at: https://www.gov.uk/guidance/stamp-duty-land-tax-changes-from-1-july-2021
- The slowdown in the UK housing market in 2025 is partly due to a decrease in interest rates, which has improved buyers' financial capacity for purchasing properties.
- Investing in real estate is expected to remain attractive in the long term, with UK house prices projected to increase by about 24.5% by the end of 2029.
- In light of ongoing economic uncertainties, it's crucial for investors and home buyers to stay informed about properties, particularly in the areas with the fastest growth, such as the north west of England, Scotland, and Northern Ireland.
