Will home costs rise or fall in 2025? We reveal 9 forecasts that matter – they usually ALL predict development

House prices have once again defied expectations in 2024, as they did in 2023.

Higher mortgage rates and high inflation had many speculating at the start of the year that house prices would fall. Instead, they have risen – and substantially. 

The price of the typical home increased by around £10,000 in the year to October, according to the latest figures from the Office for National Statistics.

The average home sold for around £292,000 in October – which is an increase of 3.4 per cent on the same time last year when the average property was selling for £282,000.

The ONS figures run on a delay compared to other house price indexes, but are considered more accurate because they are based on completed sales. But other indexes also paint a similar picture.

Annually, house prices are up 4.8 per cent, according to Halifax – or £14,468 – the strongest level since November 2022.

On a year-on-year basis, Nationwide says house prices were up 3.7 per cent – the biggest annual rise in two years. 

Zoopla paints the least rosy picture. The property portal said house prices went up by 1.5 per cent over the past year.

While house prices have edged higher this year, the number of sales going ahead has surged compared to 2023.

As of October, property transactions were up 21 per cent compared to the previous year, according to HMRC figures. 

More recent data from Rightmove, showed the number of sales agreed up by 22 per cent, and new buyer enquiries is up by 13 per cent year-on-year. 

Looking ahead to 2025, all forecast house prices to rise next year. This is a far cry from this time last year, when the majority thought the direction was down.

In 2023, house prices fell by 1.9 per cent, according to Land Registry data. Prices in 2024 are on course to finish somewhere between 3 and 4 per cent higher. 

We look at the different forecasts for house prices next year, and assess the factors weighing on the market.

What the mortgage lenders say…

NATIONWIDE 

• 2025 prediction: 2% to 4% up 

Previous forecasts 

• 2023 prediction: 5% fall 
• 2024 prediction: 0% to 2% fall

Britain’s biggest mutual has predicted average house prices will grow between 2 per cent and 4 per cent in 2025.

In cash terms, the average property is currently worth £268,144, based on Nationwide’s data.

A 4 per cent rise would see £10,725 added to the price of the typical home. 

Meanwhile, the more conservative 2 per cent estimate would see it rise £5,363. 

Robert Gardner, chief economist at Nationwide said: ‘Providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth, where the latter is likely to remain broadly in the 2-4 per cent range in 2025.’

HALIFAX 

• 2025 prediction: 0% to 3% up 

Previous forecasts 

• 2023 prediction: 8% fall
• 2024 prediction: 2% to 4% fall

Lender Halifax has forecast modest house price growth of between 0 per cent and 3 per cent next year, along with a further small increase in the number of transactions.

However, it concedes that its forecast remains uncertain given the current economic environment.

Amanda Bryden, head of Halifax Mortgages said: ‘Looking ahead to 2025, despite the positive trends we’ve seen over recent months, there’s no doubt mortgage affordability remains a challenge for many buyers.

‘While further cuts to bank rate are still on the cards, the pace looks likely to be more gradual than previously anticipated, and many homeowners with older fixed-rate deals ending next year face refinancing at much higher rates.

‘But with employment conditions remaining positive, buyer demand should continue to hold up well.’

What the property portals say… 

What the property portals say…

RIGHTMOVE

 2025 prediction: 4% up

Previous forecasts 

• 2023 prediction: 2% fall
• 2024 prediction: 1% fall

Unlike other predictions, Rightmove tracks asking prices, rather than the price homes are agreed or sold for. 

Asking prices ended the year 1.4 per cent up this year, and Rightmove predicts that new seller asking prices will rise by 4 per cent next year.

It experts think that falling mortgage rates are set to further improve affordability and stimulate market activity.

Tim Bannister, a property expert at Rightmove said: ‘Looking at our data and the UK’s underlying housing needs, there are lots of reasons to be positive about next year. 

‘However, as we’ve seen several times this year, the market is sensitive to unexpected events and the direction of travel can change. 

‘The stamp duty changes are a cloud over the market at the moment, with some groups much more impacted than others, and therefore keen to avoid the additional charges. 

‘After the important first three months of the year in 2025, a lot depends on how quickly normal activity is resumed with higher stamp duty in England. 

‘A bank rate cut and some mortgage rate falls early on in the year would help to settle the market and provide a boost to sentiment and consumer confidence.’

ZOOPLA 

2025 prediction: 2.5% up

Previous forecasts 

• 2023 prediction: 5% fall
• 2024 prediction: 2% fall

House prices are projected to increase by 2.5 per cent over 2025, according to Zoopla.

However, it says house prices in the Midlands, Northern England, Scotland and Wales are likely to out-perform the UK average while home prices in southern England will lag behind.

Richard Donnell, executive director at Zoopla said: ‘Higher income growth and lower mortgage rates have helped reset housing affordability faster than many expected over 2024. 

‘This has supported an increase in the number of sales and house prices over the year which we expect to continue over 2025.

‘House price growth in southern England will continue to lag the UK average and incomes will need to rise faster than prices to help reset affordability and price more households into the market.

‘First-time buyers will remain an important buyer group but existing homeowners looking to move will need more support to help realise their ambitions, with more and more having to look further afield to find better value for money.’

What the estate agents say…

 JLL

2025 prediction 3.5% up

Previous forecasts 

• 2023 prediction: 6% fall
• 2024 prediction 3% fall

Property prices across Britain will rise 3.5 per cent by the end of 2025, according to the real estate agents JLL.

This represents a much more positive prediction than the previous two years, which both forecasted falls. 

Its latest forecast states: ‘With the October Budget behind us, the outlook for prices remains positive. 

‘The government is forging ahead with its plan to deliver more homes, but it will take some time before we see any real impact on overall supply. 

‘Increased government borrowing means the latest inflation forecasts from the Office for Budget Responsibility have come in higher than expected, which could throw some cold water on more bullish forecasts for mortgage rates. 

‘But the direction of travel appears to be the same, even if it may take a little longer to get there.

‘Lack of supply and more competitive mortgage rates are expected to underpin growth in prices over the next five years.

It expects growth of 19.9 per cent nationally over the next five years. London house prices are expected to increase by 21.6 per cent over the same period, underpinned by a lack of new homes reaching the market for sale. 

However, it expects lower value markets to see stronger growth towards the beginning of our five-year forecast period, with more expensive markets outperforming once the rate cutting cycle continues into 2026 and 2027.

CHESTERTONS 

2025 prediction: 3.4% up

• Previous forecasts 

• 2023 prediction: 1% fall
• 2024 prediction 0.3% fall

Chestertons forecasts that property prices will rise by 3.4 per cent across the UK and 3 per cent in London in 2025, supported by lower mortgage costs, modest but consistent growth for the UK economy and inflation staying around the Bank of England’s 2 per cent target.

Whilst Chestertons believes rapid price increases are unlikely, improved affordability, pent-up demand and renewed confidence in the market should provide support for steady growth in property prices over the next three years.

HAMPTONS 

• 2025 prediction: 3% up

Previous forecasts 

• 2023 prediction: 0%
• 2024 prediction: 0%

Hamptons is forecasting house prices will rise by 3 per cent in 2025, supported by the continuing downward trend in interest rates.

The average house price in Great Britain will reach £300,000 by the end of 2025, about £10,000 above its current level .

By the end of next year, it says prices in every region should have recovered to their 2022 pre-mini Budget peaks. 

Aneisha Beveridge, head of research at Hamptons said: ‘The base rate is likely to reach around 3.75 per cent by the end of next year. While these cuts have already been priced into mortgages, fierce competition among lenders should reduce borrowing costs for households seeking higher loan-to-value borrowing and niche lending. 

‘This should particularly help first-time buyers and upsizing households who typically require larger loans. 

‘However, mortgage rates for those with more equity are unlikely to fall much more. 

‘Furthermore, a stamp duty rise from April 2025 and a weak economic backdrop will temper price growth.

‘2025 is anticipated to mark the beginning of a new housing cycle when London starts to outperform the rest of the country. 

We forecast 4 per cent price growth in London over the course of next year, outpacing the other regions for the first time since 2015.’

KNIGHT FRANK 

2025 prediction: 2.5% up

Previous forecasts 

• 2023 prediction: 5% fall
• 2024 prediction: 4% fall

Property experts at Knight Frank are predicting just a 2.5 per cent annual increase in the average property price in 2025.

Now that mortgage rates look set to stay higher for longer it expects this will weigh heavy on house price growth.  

Tom Bill, head of UK residential research at Knight Frank said: ‘If you wanted to place a bet on the future of the UK housing market, the first few months of 2025 would not be a good time.

‘Consumer confidence will be brittle, and tax deadlines may artificially inflate demand. Meanwhile, bond markets will still be processing October’s Budget as more economic data is released. Reaching a verdict will be difficult.

‘We revised down marginally last month but predict modest price growth across residential markets. 

‘The reassessment followed a rise in mortgage rates triggered by the Budget, which saw the government’s financial headroom narrow, and the risk of inflation increase.’

Tax changes in April could also distort the picture, according to Bill.

‘First, the nil rate band for stamp duty reverts to £250,000 from £125,000. It means bills will rise by up to £2,500. A similar reversion means up to £6,250 in additional stamp duty for first-time buyers.

Based on the experience of the stamp duty holiday during the pandemic, a busy March will be followed by an April lull.’

SAVILLS 

2025 prediction: 4% up

Previous forecasts 

• 2023 prediction: 10% fall
• 2024 prediction: 3% rise

Savills expects house prices to increase by 4 per cent in 2025, or £14,500 on average.

‘With less external noise, house prices in the medium term will be dictated by the fundamentals of demand, supply and affordability,’ said Lucian Cook, head of residential research at Savills.

‘The direction of mortgage rates has been key to buyer decisions over the past two years, and decreased monthly mortgage costs are now feeding through into improved confidence amongst prospective buyers, prompting the moderate house price growth we have seen over the past few months.

‘A steady improvement in affordability should allow for house price growth to gain momentum over the next couple of years. But there is still some potential for a bumpy ride. 

‘The market will remain sensitive to short-term fluctuations in the cost of debt and changes to property taxation have the potential to cause some short-term disruption.’