Our 2025 house price forecast

As we edge towards the end of the year, we predict what might happen to property prices over the coming 12 months. Our experts 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.

Our real-time data means we can spot trends and changes in the housing market 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%.

We saw some home-movers put their plans on hold in the run-up to the Budget as they waited to see what measures were announced. And the lack of measures to help home-movers, particularly first-time buyers, meant this hesitation continued.

But, since the Base Rate cut, we've seen an increase in buyer demand. The number of people contacting estate agents about homes for sale up 23% on the quieter 2023 housing market, and the number of sales agreed is up 26%.

What happened to house prices this month?

We've seen average house prices fall 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 we usually see in October.

Read our monthly House Price Index in full here

Our data on 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 we're seeing are pointing to an increase in house prices over the course of 2025. Our property expert, Tim Bannister, says: "The signs are that the market momentum that we've been seeing 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, we still expect some twists and turns 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're 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 us up for what we predict will 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."

A mortgage calculatorcan be a great tool to give you an idea of how much you could borrow, based on the size of your deposit, and your income. You can also get a personalised result by applying for a Mortgage in Principle, which will take you one step closer to a mortgage offer.

The header image for this article was provided courtesy of Philip Booth Esq, Henley on Thames

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