Where will house prices rise the most in 2025?
Growth rates differ across different areas of the country - but also depending on forecasts of economic factors
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Average house prices are forecast to rise across the UK this year - but the gains will depend on where you live.
Homebuyer demand is set to be boosted by anticipated interest rate cuts during 2025, which should bring mortgage pricing down, while the market doesnât have the uncertainty of a general election to contend with this year.
House prices came under pressure in the first half of 2024 due to high inflation but began to recover in the second half of the year as the cost of living measure dropped and interest rates were cut. There are still some pressure on the market though.
Homebuyers are currently racing to complete purchases before stamp duty thresholds drop in April so they can keep their property tax bills down.
Additionally, there are concerns that tax rises in chancellor Rachel Reevesâ Autumn Budget, such as higher national insurance rates for employers, could hit buyer confidence if shop prices are pushed up and if there are job cuts or limits on pay rises.
There is already concern about the UK economyâs growth prospects since the Budget. Gilt yields have increased, which some experts predict could keep interest rates higher for longer, again limiting buyer demand and therefore keeping house price growth down.
House price growth forecasts range from 2.5 per cent to four per cent. These are national averages though and the trouble is that no-one really lives in an average house.
The UK is made up of lots of different markets, which will have their own pressures on supply and demand and therefore prices.
For example, Savills is predicting that UK house prices will rise by 4 per cent this year, but has forecast a four per cent decline in prime central London due to higher stamp duty rates and the end of non-dom status, which could deter foreign buyers.
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Go to websiteLucian Cook, head of residential research for Savills, said: âIn a normal housing market recovery, you would expect the top-end of the market to recover first, responding quickest to a change in sentiment.
âHowever, the additional stamp duty surcharge for second homes, changes in ânon-domsâ taxation and VAT on school fees are likely to offset some of the impacts of future cuts in interest rates this time around.â
Hereâs where house prices are forecast to rise in 2025.
London
(Getty Images )Despite pressures in the centre of the capital, estate agents are confident that the rest of London will see decent price growth.
Hamptons, which is predicting 3 per cent average house price growth across the UK, believes London will lead the way with growth of four per cent.
Aneisha Beveridge, head of research at Hamptons, said: â2025 is anticipated to mark the beginning of a new housing cycle when London starts to outperform the rest of the country.
âHowever, unlike the beginning of previous cycles such as in 2008 and 1994, areas outside prime central London are expected to be the strongest performers. Prime central Londonâs recovery is likely to be delayed as buyers and sellers adjust to revised tax rules.â
North-south divide
Property website Zoopla has taken a different view on house price growth prospects.
It has looked at the affordability of homes based on local wages and prices, how quickly property is selling, how much asking prices are being cut to attract demand and how many homes have been on the market for more than six months to determine which areas of the UK could grow the most in 2025.
It found that house prices in Scotland are among the cheapest in the UK compared with incomes, while homes are generally selling faster as the buying process is different.
Motherwell is already registering the fastest house price growth in the country at 3.8 per cent, followed by 3.5 per cent in Falkirk against a 2.6 per cent average for Scotland.
The markets with the best prospects for house price growth in 2025 in England are in the north of the country, Zoopla said.
This is because average house prices are already lower so buyers wonât be as impacted by relatively high mortgage rates compared with the south, according to the research. Zoopla is predicting a five per cent annual rise in house prices in Wigan, three per cent in Stoke-on-Trent and 2.1 per cent rise in Newcastle.
In contrast, it is predicting that price growth in much of the south will be below two per cent and may even drop in some coastal areas such as Torquay, which Zoopla has attributed to a decline in remote working and incoming tax changes on second homes.
Zoopla has forecast average growth across the UK of 2.5 per cent for the year.
Richard Donnell, executive director at Zoopla, said: âHigher 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.
âHouse 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.â
External factors
(Getty Images/iStockphoto )There are plenty of other factors that could help or hinder the market such as the impact of trade tariffs promised by the new US president Donald Trump as well as the ongoing impact of the Autumn Budget in the UK.
That can make house price growth hard to predict.
Estate agency brand Knight Frank already revised its forecasts at the end of last year before 2025 even began due to the Budget.
It now expects average UK house price growth of 2.5 per cent in 2025, three per cent in 2026, and 3.5 per cent in 2027 down from its August forecast of three per cent, four per cent and five per cent respectively.
Tom Bill, head of UK residential research for Knight Frank, said the UK housing market is âout of syncâ as many buyers are on mortgage offers agreed before the Autumn Budget that may be cheaper, while house prices may be kept high in the first quarter of 2025 due to the rush to beat the stamp duty deadline.
The stamp duty rush is keeping estate agents positive for now.
Iain McKenzie, chief executive of The Guild of Property Professionals, said: âA word that is frequently used about the property market is resilient, and this is because it continues to defy expectations.
âWith the market starting in a stronger position than last year, it is expected that prices will continue to marginally grow over the course of the year, however, realistic pricing remains key. House prices have been underpinned by the increase in activity following the announcement regarding stamp duty changes, enticing many to move before the change in April.
âWith mortgage rates still elevated, all eyes will be on the Bank of England, with many hoping for a rate cut at the next meeting in February. This should spur sentiment in the market and will hopefully have a knock-on effect on mortgage rates. Many are expecting a few rates cuts throughout 2025, but the frequency will depend on inflation playing its part.â
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