Forecast for house prices in 2025
As we edge towards the end of the year, Carpenter Surveyors have been researching what the property experts predict what might happen to property prices over the coming 12 months.
They look at things like seasonal trends from previous years and what’s expected to play out in the wider economy, as well as things that could influence the direction of mortgage rates.
Real-time data means trends and changes in the housing market can be spotted as they’re happening, including how home-movers have responded to events like the Chancellor’s Autumn Budget and the second Base Rate cut of the year on 7 November, which took interest rates to 4.75%.
Some home-movers put their plans on hold in the run-up to the Budget as they waited to see what measures were announced. The lack of measures to help home-movers, particularly first-time buyers, meant this hesitation continued.
However, since the Base Rate cut, there has been an increase in buyer demand. The number of people contacting estate agents about homes for sale is up 23% on the quieter 2023 housing market, and the number of sales agreed is up 26%.
Average house prices have fallen this month, and right now, the average property price is £366,592 (-1.4% since last month). This comes after last month’s more muted house price growth compared to what is usually seen in October.
Data from the past two months shows that sellers are coming to market with more competitively priced homes in the hope of finding a buyer before the seasonal slow-down in the run-up to Christmas.
Despite this monthly house price fall, the strong home-moving activity levels seen are pointing to an increase in house prices over the course of 2025.
Property expert Tim Bannister says: “The signs are that the market momentum that has been seen this year will continue into next year, especially if mortgage rates drop to a level that gives greater affordability to some movers who have been waiting in the wings until now. However, some twists and turns are still expected next year. The speed at which mortgage rates come down next year will be key in determining activity levels for some of the market’s traditionally busiest periods.”
While the Bank of England’s Base Rate and mortgage rates are predicted to edge down more slowly than previously thought, they are still predicted to fall over the course of 2025, which would improve affordability for those looking to move next year.
More people choosing to make their move in 2025, teamed with lower mortgage rates, could push house prices up by 4% over the course of 2025.
Tim adds: “The big picture of market activity remains positive when compared to the quieter market at this time last year. This sets up what is predicted to be a stronger 2025 in both prices and number of homes sold, particularly if mortgage rates fall by enough to significantly improve affordability for more of the mass-market.”