Savills predicts a resurgence in UK house price growth, expecting an average increase of £84,000 by 2029.
Falling interest rates and stabilising inflation are projected to support a 4% rise in prices next year, with total growth reaching 23.4% by the end of 2029, driven by renewed market confidence as affordability improves.
The property advisory firm’s new five-year forecast anticipates a steady recovery in house prices, beginning with a 4% growth rate in 2025, as inflation settles to 2% and interest rates trend downward.
Average prices are projected to rise from £358,000 in 2024 to £442,000 by 2029, benefiting from more competitive mortgage rates. The current base rate of 4.75% is expected to fall to 2% by 2027, with average mortgage rates similarly predicted to decline from 4.56% to 2.64%.
Savills head of residential research Lucian Cook said: “The direction of mortgage rates has been key to buyer decisions, and decreasing monthly costs are improving confidence among prospective buyers.” However, Cook cautioned that short-term fluctuations in debt costs and property taxation changes could introduce some volatility in price trends.
The firm expects home mover activity to gradually recover, peaking at 1.15 million transactions in 2028, although not uniformly across regions or demographics. Emily Williams, Savills’ director of research, explained that second- and third-time movers may drive much of the recovery in later years, benefiting from accumulated home equity and lower borrowing rates.
First-time buyer levels are projected to remain below pre-pandemic averages due to limited government support, following the end of Help to Buy, and tighter regulations affecting rental and buy-to-let demand.
In regional forecasts, Savills anticipates faster growth in more affordable areas, such as the North and Scotland, with the North West leading at 29.4% over five years. Higher-cost areas, including London and the South East, are expected to see more modest gains of 17.1% and 17.6%, respectively, as affordability pressures limit growth despite declining rates.
By 2025, Savills expects regional variations to settle, with demand once again reflecting affordability and local market fundamentals. Cook concluded: “Despite improved affordability, buyers in pricier areas will still face higher borrowing needs, while the North, with comparatively lower costs, could see stronger growth.”
These projections follow a notable 10.5% real-term decline in prices since their August 2022 peak, as inflation and rate hikes constrained buyer activity. However, as inflation normalises, Savills foresees a five-year return to growth, with real house price appreciation of 11%, helping prices recover to pre-mini-budget levels.
