UK house prices recovered last year and with the Bank of England cutting interest rates there are hopes that house prices might go up in 2025..
The Bank of England’s decision to lower interest rates to 4.5% in February 2025 sparked hopes that house prices will rise, with lower borrowing costs making it easier for first-time buyers and home movers.
At the same time wages are rising and the cost of living crisis has eased, which should benefit house prices.
But new property taxes are coming too – that could potentially dampen demand from buyers.
In this article, we cover:
Read more: Will UK mortgage rates go down in 2024?
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Are house prices going down?
Evidence suggests that house prices are rising rather than going down at the moment. The Halifax House Price Index for December 2024 highlighted this.
Amanda Bryden, Head of Mortgages at Halifax, said: “UK house prices finished 2024 up 3.3% over the year, with the average house price coming in at £297,166.”
“In many areas across the country, house prices were also buoyed by demand outstripping supply, possibly further amplified by homeowners holding off putting their property on the market, perhaps in anticipation of mortgage rates reducing further.”
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What will UK houses be worth in 2030?
It can be difficult to accurately predict how much houses will be worth in 2030, as there are different factors that can influence prices, which we may not foresee.
Mashroom, a landlord insurance company, predicted in 2019 that: “By 2030, the average house price across England could be as much as £457,433.”
They continue: “Based on the current market, the only areas of England that will offer an average house price under £280,000 in just 15 years’ time are Merseyside (£275,074), East Riding of Yorkshire (£277,411), and Durham (£279,985).”
Goodmove also made a prediction in 2021 for how much prices will be worth in years around 2030.
They wrote: “If average house prices continue to rise as they have been doing, by 2025, the average property will cost £251,476. This figure will then tip over the £300,000 mark in 2035.”
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Why are house prices so high?
There are various different reasons as to why house prices are so high. Inflation, which is the rate at which prices are rising over time, is a big factor. You can read more about how inflation affects house prices in our guide, ‘What is the UK inflation rate and what does it mean for you?
A rising population is another reason, as it puts more of a demand on the housing market. The Office for National Statistics says that over the 15 years between mid-2021 and mid-2036, the UK population is projected to grow by 6.6 million people, which is an increase of 9.9%. This rising population itself is due to a range of factors, like increased life expectancy.
How are mortgage rates affecting house prices?
There are a number of ways in which mortgage rates affect house prices; see some ways listed below.
- Interest rates: when interest rates increase, the cost of being a homeowner also increases, which means that there becomes less demand. This can then lead to a drop in house prices
- Investor activity: investors may take advantage of low interest rates to expand their property portfolios. This can push up prices for certain properties
- Wait-and-see approach: prospective buyers may hold off buying homes if interest rates are high and wait to see if they reduce.
How do prices differ for different types of property?
There are many factors that influence the variety of different house prices that you see on the market. Listed below are some of the factors.
- Location: some areas are more expensive to buy in than others. For example, a one-bedroom flat in London is likely to be more expensive than other UK cities.
- Size: larger properties with more rooms tend to be more expensive than smaller ones
- Neighbourhood: whether a neighbourhood is widely considered to be desirable or not can impact property prices
- Amenities: the local amenities, such as local public transport, good local schools, and green spaces, can all impact property prices.
- The property market: house prices can go up or down depending on the property market at the time
- The seasons: house prices are slightly seasonal. Many bodies such as Natwest have noted a seasonal change in house prices
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Where are house prices cheapest and most expensive in the Britain
It was reported by Rightmove that the following lists of cities have been found to be the cheapest and most expensive in Britain, thanks to data from Rightmove.
Cities that were found to be the cheapest to buy in for a first time first-time buyer for a property with two bedrooms of fewer:
- Aberdeen (average asking price was £102,601)
- Bradford (average asking price was £107,929)
- Sunderland (average asking price was £111,263)
- Carlisle (average asking price was £111,268)
- Preston (average asking price was £112,273)
On the other side of the coin, the following cities were found to be the most to buy in for a first time first-time buyer for a property with two bedrooms of fewer:
- London (average asking price was £501,934)
- St. Albans (average asking price was £391,964)
- Cambridge (average asking price was £361,429)
- Winchester (average asking price was £344,634)
- Oxford (average asking price was £338,085)
As you can see, London ranks as the most expensive place to buy a home. If you want to learn more about buying in London, read our guide London house prices: Your complete property market guideRead more: Five cheapest places to buy a house in the UK
Should I buy now?
There are different factors to consider when evaluating whether to buy now. As mentioned, evidence suggests that house prices are rising, rather than going down. The Halifax HPI for December has highlighted this.
Meanwhile, the Bank of England cut interest rates to 4.5% from 4.75% in February 2025. This means that it costs less to borrow money, such as for a mortgage.
You can read more about whether now is a good time to buy a house in our guide: Is now a good time to buy a house or should I wait?
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