Average house prices returned to growth in 2024 but it is less clear how well the market will fare in 2025.
House prices are a “British obsession”, said ThisIsMoney, and while property values may rise in the long term, “short-term sluggishness” can affect those needing to buy or sell.
Experts are predicting house price increases of between 1% and 4% during 2025, said the HomeOwners Alliance, but “no one has a crystal ball and the experts often get it wrong”.
What happened to house prices in 2024?
House prices experienced a “decent recovery” in 2024, said MoneyWeek, with buyer confidence “boosted” by interest rate cuts in August and November.
The property market was “surprisingly resilient” in 2024 despite high mortgage pricing, said Nationwide.
The building society’s latest house price index showed typical values were up 4.7% annually in December, “just below the all-time high recorded in summer 2022”.
However, the latest Halifax House Price Index for December 2024 was less bullish, and put annual growth at 3.3%.
It also suggested that average prices fell by 0.2% in December 2024, as the “return of rising borrowing costs squeezed buyers” in the aftermath of tax rises announced in the Autumn Budget, said The Times.
Will house prices rise in 2025?
House price records are “set to be smashed in 2025”, said The Big Issue, amid a race to secure deals before stamp duty thresholds drop in April.
But Robert Gardner, chief economist for Nationwide, said this could “generate volatility”, as buyers bring forward purchases to avoid the additional tax, making it “more difficult to discern the underlying strength of the market”.
There is also pressure after experts “scaled back” the number of interest rate cuts expected in the coming months, said MoneyWeek, due to tax rises in the Budget and new inflationary pressures, which could hit demand and hamper price growth.
Despite these pressures, property listings website Rightmove is predicting that asking prices will rise by 4% this year, as mortgage rate cuts “help to stimulate activity”.
When it comes to sold prices, estate agency brand Savills predicts UK house prices will rise by 4% on average, helped by “lower levels of homeworking and the need to return to commuter hotspots near major employment hubs”.
Property website Zoopla’s forecasts are lower at 2.5%, with a regional divide.
Price growth will be lower in southern England and faster elsewhere, said Zoopla, “down to the relative affordability of housing across the country and how much house prices have risen relative to household incomes”.
However, these predictions are all subject to change.
Recessions or unexpected inflation spikes could “disrupt” house price forecasts, said The HomeOwners Alliance, while government policy changes “may impact buyer confidence and market activity”.