UK Property Market Forecast: House Prices Set to Soar by 25% in the Next Five Years

Why Investors Should Consider Property in the UK Right Now

In an exciting forecast for property investors, UK house prices are expected to jump by nearly 25% by 2029, according to leading estate agency Savills. Following the turbulence of recent economic events, including the 2022 mini-Budget, this upward trend reflects a stabilizing housing market, driven largely by improving mortgage affordability and strengthening buyer confidence.

Savills projects a 23.4% increase in property values—an £84,000 rise on average—across the UK over the next five years. This comes as the housing market finds a new equilibrium post-Budget uncertainties, setting the stage for substantial investment opportunities. If you’re considering adding UK property to your portfolio, this forecast signals strong potential returns in the years ahead.

The Impact of Mortgage Rates on Property Demand

The driving force behind the anticipated growth is decreasing mortgage rates, which have eased significantly over the past year. Lower monthly mortgage costs are restoring affordability and encouraging buyers back into the market, according to Lucian Cook, Head of Residential Research at Savills. "With improved affordability, house prices should begin to gain momentum over the next couple of years," he noted, adding that though some short-term fluctuations in borrowing costs may still affect the market, the trend is unmistakably positive for prospective property investors.

Regional Variations: Northern England Leads the Growth

Notably, Northern England is forecast to experience some of the strongest growth rates, with house prices in areas like the North West and Yorkshire expected to climb between 28% and 29% by 2029. This regional disparity can be attributed to greater affordability in these areas, coupled with less strain on mortgaged buyers than in the South. For investors, this means higher potential returns on properties in these regions, making Northern England an attractive consideration for those looking to maximize their investments.

Current Market Conditions: A Steady Recovery

In August 2023, house prices across the UK rose by 1.5%, achieving an annual growth rate of 2.8% according to official figures. The average property price now sits at £293,000, up £8,000 from last year, demonstrating resilience amid recent economic fluctuations. The official UK House Price Index indicates that Northern Ireland saw the most significant annual rise (6.4%), followed by Scotland (5.4%), and England, with more modest growth at 2.3%.

Where to Invest: High-Growth Regions to Watch

With varying growth rates across the UK, certain regions stand out for their potential:

• Northern Ireland: Property prices have grown by 6.4% in the past year, making this region an investment hotspot.

• Scotland and the North West: The North West recorded a 4.6% increase, with Yorkshire and the Humber close behind at 4.4%, underscoring these regions as prime targets for investors.

• South West and London: While London remains the priciest area, growth has slowed to 1.4%, with the average home costing £531,212. This makes London a potentially slower return market but still a stable option for high-value property investment.

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Why Now is the Time to Invest

For savvy property investors, the UK’s projected 25% house price growth provides a compelling reason to invest now. With increased demand fueled by lower mortgage rates and strengthening buyer confidence, the housing market is set to reward those who act early. Key growth regions in the North, where affordability remains a strong driver, present particularly promising returns.

Bottom Line

The UK's property market is on a promising upward trajectory. By leveraging current market conditions and focusing on high-growth areas, investors can position themselves for substantial returns by 2029. Whether looking to buy, hold, or diversify, now is the time to take advantage of the evolving UK property market.

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