Will home costs go up in 2025? Six property specialists give their verdict

House prices are not just a popular conservation topic, but a British obsession.

It is without doubt the question I am asked most by people, once they find out I am a journalist who writes about property.

While it is easy to take the view that prices will keep rising in the long run, short-term sluggishness can still have a big impact on those with a pressing need to buy or sell. 

Over the last 50 years, the average UK property price has risen from £9,139 in October 1974 to £292,059 as of October 2024, based on the latest Land Registry figures. That represents an average increase of more than 3,095 per cent.

If history were to repeat itself and house prices grew by the same levels over the next 50 years, that would mean the average UK home could cost over £9million in 2074.

While predicting the next five decades would be impossible, it is perhaps a little more reasonable for people to forecast what will happen over the next 12 months.

Did house prices rise in 2024?

This time last year, we asked six property experts what they thought would happen to house prices in 2024.

Some predicted that prices would fall by 5 per cent while others expected house prices would rise by as much as 2 per cent.

We won’t know definitively if they were correct until the ONS house price index – which is based on completed transactions logged with the Land Registry and therefore has the most accurate data – has November’s and December’s final figures. 

At its latest reading, the ONS said house prices were up 3.4 per cent in the 12 months to October, though this is still a provisional estimate.

Zoopla perhaps the most up-to-date snapshot on house prices using sold prices, mortgage valuations and data from recently agreed sales.

Its latest figures, released on 23 December, show average property prices rose by 1.9 per cent in the 12 months to November.

This varied widely across the country. For example, in Northern Ireland, house prices are up 6.5 per cent year-on-year, while in the South East of England, prices are up by just 0.7 per cent.

We went back to our six experts and asked them for their house price predictions for 2025 and where the housing market hot and cold spots will be. 

Paula Higgins, chief executive of HomeOwners Alliance

Last year’s prediction: +2% 

Prediction for 2025: +4% 

I am predicting house prices to continue a steady climb through 2025 increasing by 4 per cent across the year. 

While it is possible that Budget tax rises and stamp duty changes from April 2025 could knock market confidence, it is more likely that sustained interest rate cuts and falling mortgage rates will help to support buyer demand as well as the anticipation of more property transactions in 2025.

Property market hot and cold spots 

Manchester is still likely to be a hotspot in 2025. It has consistently been near the top of the table for house price growth this year and with a growing economy, improving transport links and plenty of new developments, it is likely to remain a popular market.

The region of Wales has seen relatively slow annual house price growth this year and with another rise in second home stamp duty, it could be a likely cold spot, with Cardiff leading the charge. 

Jonathan Hopper, buying agent at Garrington Property Finders

Last year’s prediction: +1 or +2%

Prediction for 2025: +2%

Falling interest rates and cheaper mortgages will help the property market heat up in 2025, but tax changes will have an even greater impact – for both good and bad.

April’s lowering of the stamp duty thresholds is already turning up the heat among many first-time buyers who are racing to complete their purchases before the changes take effect.

This is pumping up prices at the lower end of the market and bringing forward many of the transactions that might otherwise have been made later in the year.

At a national level, I expect price rises to be tepid rather than turbocharged – around 2 per cent over the year.

The reason for this is many parts of the market will be moving in different directions. Family homes may surge in value, while the price of investment properties flatlines in the face of the council tax hike on second homes.

Good value areas will do well, so I expect the North to beat the South again and the price of first-time buyer properties could outpace those in more established, prime areas.

Property market hot and cold spots

In coastal areas with a high proportion of second homes, a glut of supply and weak demand could drive down prices.

Coastal property markets are already battening down the hatches and bracing for the worst. 

From April, local authorities will for the first time have carte blanche to implement a 100 per cent council tax surcharge on second homes – and this change will disproportionately impact coastal areas, where many properties are holiday homes.

For the thousands of people with a cottage they rent out, or simply enjoy with their families, it could mean an additional tax bill of over £4,000 a year. 

This prospect has already prompted many to throw in the beach towel, and a surge in the number of coastal homes for sale could depress prices significantly in 2025.

By contrast the addition of VAT to private school fees in January will create some big winners. Top of the class are Buckinghamshire and Kent, two of the counties with the highest number of grammar schools.

Leafy, historic towns like Sevenoaks and Tunbridge Wells in Kent, or Amersham and Beaconsfield in Buckinghamshire, have long appealed to professionals with children because of their good schools and easy transport links to London.

They’re now set to receive a huge boost as well-heeled parents horrified by the prospect of paying an additional 20 per cent on top of already high school fees seek out grammar schools which offer a top-notch education for free.

To find the ‘golden postcodes’ of 2025, start with a map of grammar schools ranked Outstanding by Ofsted. 

Expect the competition for homes, and school places, in these areas to be fierce as the spike in demand and lower interest rates combine to send property prices skyward. 

Stuart Cheetham, chief executive of MPowered Mortgages

Last year’s prediction: -5%

Prediction for 2025: +5%

In 2025, I expect we are going to overall see some positive house price growth of around 5 per cent but this will be nearer 10 per cent in some localised hotspots. 

Localised hotspots include popular family housing areas where there is access to good schools. In these areas there is strong demand and limited supply.

House prices since early 2022 have been constrained by interest rates and whilst on paper half of UK homeowners own their properties outright, approximately 75 per cent of houses are purchased with a mortgage, so it is access to mortgage funding which drives the property market. 

After two years of negative house price growth in most areas but strong wage growth, house prices in real terms are some 14 per cent lower. 

As the Bank of England base rate falls in 2025 and fixed rate mortgages fall ahead of this in anticipation, house buyers are gaining confidence and as a result we expect a significant growth in transactions, particularly from first-time buyers, that comes with improved affordability and certainty.

Property market hot and cold spots

Since 2016, London has fared the worst in terms of house price growth. It has been held back by the loan to income cap, which means mortgages at more than 4.5 times the borrower’s income can only account for 15 per cent of a lenders’ total loan book. 

Whilst this will remain a barrier to house price growth, a growing shortage of property and rising demand combined with some of the lowest historic growth in the last eight years relative to the rest of the UK, will mean London house prices will do well in 2025. 

At the other end of the scale, properties that are more ubiquitous, lower value and where there are many more on the market, will struggle to achieve the same returns. 

This is especially true of two bed properties, in particular flats, with around 50 per cent currently being sold by landlords looking to exit the market. Many first-time-buyers will be looking to try and snap up bargains here.

Nicky Stevenson, managing director at Fine & Country

Last year’s prediction: -1% 

Prediction for 2025: +3.4% 

With higher levels of stock and longer times taken to sell, 2024 has been a buyer’s market and I expect that 2025 will be more of the same. 

The market will be price sensitive and sellers will need to ensure that their homes are listed at a comparative market value to garner interest from buyers.

When it comes to house price predictions, no one has a crystal ball, but we believe that the average asking price will increase in-line with the long-term average seen pre-pandemic. 

Price growth is expected to build, with consensus forecasts for price growth at 3.4 per cent in 2025 and 4 per cent in 2026. 

The market is currently more stable, and the economic environment is improving. With less uncertainty, we believe more buyers will be inclined to make a move during 2025. 

House prices are synonymous with demand and transactions are expected to increase next year, which will underpin house price growth in 2025.

Property market hot and cold spots

While the London market currently lags behind, if we see more businesses expecting their employees to return to the office five days a week in 2025, we could see a renewed interest in the capital’s property market and prices to respond accordingly.

Equally the reverse could happen. In the autumn Budget it was confirmed that stamp duty thresholds in England would return to previous levels from 1 April 2025, meaning the exemption limit for first time buyers drops from £425,000 to £300,000. 

That will mean only around 8 per cent of the homes for sale in London would be stamp-duty free for first-time buyers, 24 per cent in the South East and 32 per cent in the East of England. The changes will likely impact buying patterns. 

Jeremy Leaf, London estate agent

Last year’s prediction: Between 0% and -5%

Prediction for 2025: Between 0% and 5%

Housing market activity proved more resilient than many expected in 2024 despite uncertainty before and after the change of government, not helped by the cost-of-living crisis.

However, enquiries and sales improved when interest rates and inflation started to drop.

Increases in salaries consistently outpacing those of house prices have continued to underpin moving plans and release pent-up demand. 

On the other hand, the likelihood that neither mortgage costs or inflation are likely to fall as far or as fast as previously anticipated, as well as Budget tax fallout, is restraining over ambitious sellers – and prices. 

As a result, we are finding that it is attractively-priced and well-presented properties that are attracting most attention. Bearing in mind four out of five sellers are said to also be buyers, the message needs to be heard loud and clear.

Looking forward, we don’t anticipate much of an uplift in values over the coming year, perhaps up to 5 per cent on average. 

Of course, such an average conceals highs and lows for different properties in different areas. 

A slow improvement in activity, combined with increased buyer and seller realism is expected next year. 

Interest from first-time buyers will probably accelerate before the stamp duty concession is removed at the end of March now that fewer investors will probably be competing for similar properties after their liability for the same taxes rose.

The recent upward direction of travel for mortgage approvals – a reliable indicator of future activity even though many were trying to beat significant Budget taxes – will mean a good start to the new year at least seems assured.

Property market hot and cold spots

Prices are often just as much determined by local issues, school and transport links and new developments – although the pace of base rate reductions will have a strong bearing.

Longer-term purchases such as houses will probably hold their value better than shorter-term buys, such as flats, where finances are under more pressure, depending on stock levels locally too.

Charlie Lamdin, founder of property site BestAgent

Last year’s prediction: -5%

Prediction for 2025: Between 0% and -5%

I get daily messages from buyers and sellers across the country. In the whole of 2024 I have had zero reports of people having sold for a higher price than they bought for in 2021, 2022 or 2023. 

In the real world, the ONS will not complete its revisions for 2024 prices until early 2026, so we won’t know until then how right or wrong I was, but I remain of the view that, overall, prices fell in 2024, and that’s before taking inflation into account. 

Sellers who priced well first time got competing bidders and sold quickly for the best price the market would support. 

But there are hundreds of thousands of unsold listings that have sat gathering dust on the shelves, being taken down, then relisted to no avail. 

Price reduction data (notably not reported by anyone except Zoopla) is not available yet. It’s also worth noting that my views are predominantly for the England and Wales markets.

Hence, I stand by my price call for 2024, and this time next year we’ll have a better idea if I was right or not.

My single digit prediction for 2025 house price movement is 0 per cent, if we’re talking about what the ONS is going to prematurely estimate, but in real terms I think it will be another slide of -5 per cent overall.

Property market hot and cold spots

In my opinion, 2025 offers the best upsizing opportunity in a generation for those moving up to ‘top of the ladder’ properties, wherever they are in the country. 

Whether or not that’s hot or cold for you depends on whether you’re buying or selling. Downsizers are having a really rough time of it at the moment.

Geographically, Belfast and Northern Ireland in general seem to be outperforming the rest of the UK on price. East Anglia, Devon and the North West are all showing the weakest house price growth.

In terms of financial opportunities, they are as slim on the ground as they have been in my 35 years in the industry. Only the brave and experienced will be making any money, and they’ll be doing that on the back of the absolute bargains to be had in this buyer’s market.

It’s not a bad time for first time buyers, despite mortgage rates refusing to come down any further. 

Prices aren’t running away from them, so there’s no hurry. There’s also more choice. So browse at leisure, always make your offer, but don’t overpay, especially not in this market.