One of the biggest names in housing market research, Savills, has slashed its forecast for house price growth in 2025.
At the start of the year it suggested a 4% rise by the end of December – now it says it will be just 1%, well below the rate of inflation.
“Interest rates have fallen as expected, giving buyers a bit more financial capacity than they had a year ago. But a lot has changed over the last six months. Greater geopolitical uncertainty – including tariffs and trade wars – has made predicting the precise path of further cuts more challenging” comments Lucian Cook, head of residential research at Savills.
“The last three months have been marked by a lack of buyer activity, despite improving affordability, and annual house price growth slowed to 2.1% in the year to June, according to Nationwide (down from 4.7% in December 2024). In light of this and the potential for more buyer uncertainty in the run up to the Autumn Budget, we have revised our house price forecast for this year”.
Against this backdrop, Savills expects concerns over the prospect of future tax increases to weigh most heavily on the top end of the market.
The agency, which is regarded as one of the industry’s leading forecasters, says market activity in 2025 has been complicated by how buyers reacted to Stamp Duty changes. A surge in activity at the start of the year culminated in March seeing the second-highest monthly sales volume since 2006, as buyers rushed to beat the deadline.
However, this momentum was followed by what the agency calls “a sharp rebalancing” as new buyer enquiries plummeted to their lowest level since September 2023, according to the Royal Institution of Chartered Surveyors. While a dip was anticipated, the scale of the decline outpaced the earlier surge.
Meanwhile, supply has remained consistently positive in 2025. This imbalance led to a 0.5% dip in Q2, reflecting a high level of unsold homes on the market.
“We anticipate that buyer demand will pick up heading into early autumn, particularly among first-time buyers and mortgaged home movers, driven by an expected base rate cut in August and a more competitive mortgage market” says Emily Williams, director of research at Savills. “Consumer confidence in June was the joint highest since last summer, and mortgage rates remain at their lowest for a while.”
Total transactions are projected to reach 1.04 million by year-end, in line with previous forecasts. While elevated supply levels may temper price growth, Savills maintains a positive outlook of 1% for 2025 overall despite the slow start.
Beyond next year, house price growth will be determined by affordability, thanks to falling interest rates in combination with relaxation around affordability tests.
Overall, the agency expects house price growth to total 24.5% by the end of the five years to 2029, adding an extra £86,300 onto the average house price.
Revised five-year mainstream forecast 2025-2029
| 2025 | 2026 | 2027 | 2028 | 2029 | Five year Total | |
| Average UK house price growth | 1.0% | 4.0% | 6.0% | 6.0% | 5.5% | 24.5% |
| Previous forecast | 4.0% | 5.5% | 5.0% | 4.0% | 3.0% | 23.4% |
| UK residential transactions | 1.04m | 1.15m | 1.18m | 1.19m | 1.18m | – |
| Year-end Bank base rate | 3.75% | 3.00% | 2.50% | 2.50% | 2.50% | – |
| Real GDP growth | 1.2% | 1.0% | 1.6% | 1.9% | 1.7% | 7.6% |
Source: Savills Research, Oxford Economics
This article is taken from Landlord Today