The UK housing market is on track for significant growth, with property prices expected to rise by an average of 23.4% over the next five years according to research by Savills. Homeowners in the North of England are set to see the most substantial gains, making it an exciting time for both buyers and sellers alike. In this article I will explore the data released by Savills at the end of last year, and the potential benefits that and increase to UK house prices could have for people in the market to purchase property in the UK.
UK House Prices to Increase by £84,000 on Average
According to Savills, experts in their team predict that by the end of the decade, the average UK home could be worth £84,000 more than today. Not far off £100K in 10 years…that’s a lot! House prices are forecasted to rise by 5.5% in 2026, followed by annual increases of 5%, 4%, and 3% in the subsequent years.
UK House Prices In Northern Regions to Lead Market Growth
The biggest increases are expected in the North West, where prices are predicted to climb by nearly 30%. The North East and Yorkshire & the Humber are also set to see strong gains, with projected growth of 28.2% and 26.4%, respectively. By contrast, London and the South East are expected to see more moderate rises of around 17%. However, as always, London property will be by far the most expensive property bracket in the UK.
Mortgage Rates and Market Trends
Alongside rising house prices, mortgage rates are expected to decline, with the Bank of England’s base rate predicted to drop to 3.75% by the end of 2025 and potentially falling further to 2% by 2027, according to Saville’s experts. This decrease in borrowing costs is likely to encourage more buyers to enter the market, boosting demand and further supporting price growth. Much like the boom after COVID, a returned interest in purchasing property is predicted to occur over the next few years.
Stamp Duty Changes and Housing Demand
Despite the recent increase in the stamp duty surcharge from 3% to 5% for buy-to-let investors, and the recent changing of the threshold for first-time buyer stamp duty relief, which meant that as of the 1st of April 2025, the price at which stamp duty will be charged will drop from £425,000 to £300,000, meaning more first-time buyers will be liable for stamp duty, the overall market remains stable. First-time buyer activity may take longer to recover due to limited government support and the change in stamp duty rules, but home movers are expected to drive the housing market forward as mortgage rates settle.
Mortgage Professional Opinion
Discussing the predictions from Savills, Louis Mason, Marketing and Communications Director at Oportfolio Mortgages, comments:
“The projected rise in house prices highlights the strength of the UK property market. For buyers, acting sooner rather than later could be beneficial, as affordability may become more challenging in the coming years. Those considering a move should explore their options now to make the most of current conditions. With the value of property only increasing, if you can afford to buy, you definitely should!”
Is Now the Right Time to Buy?
With house prices set to rise, securing a property now could be a smart financial move. While there are multiple factors to consider, including mortgage rates, stamp duty, and affordability, the outlook suggests that delaying a purchase could mean paying a much more for a property later.
In Zoopla’s March 2025 house price index, they also report that UK property sales agreed continue to rise, up 5% year-on-year, price inflation is above average in northern regions and Scotland, where demand is growing faster than supply, and they too expect agreed sales to continue increasing but rising supply and static mortgage rates will temper the rate of price inflation. To discuss your mortgage options and how these market changes may affect your plans, contact us at Oportfolio Mortgages today.
