North to lead rise in house prices over next five years

House prices are forecast to rise by almost a quarter over the next five years, with homes in the north set to increase in value by much more than those in the south.
Savills, one of the country’s biggest estate agents, forecasts that, on average, UK house prices will increase by 23.4 per cent between 2025 and 2029, driven by cheaper mortgage rates, above-inflation wage growth and a continued undersupply of homes.
Labour has ambitions to build 1.5 million homes over the next five years, but there is scepticism in the housebuilding industry about whether that is possible. In the absence of a sharp jump in homebuilding, Savills is betting that demand will continue to comfortably outstrip supply.
“With less external noise, house prices in the medium term will be dictated by the fundamentals of demand, supply and affordability,” Lucian Cook, head of residential research at Savills, said. “The direction of mortgage rates has been key to buyer decisions over the past two years, and decreased monthly mortgage costs are now feeding through into improved confidence among prospective buyers, prompting the moderate house price growth we have seen over the past few months. A steady improvement in affordability should allow for house price growth to gain momentum over the next couple of years.”
Savills expects the housing market in the northwest of England to prove the strongest, with prices there forecast to be 29.4 per cent higher at the end of 2029 than at the beginning of 2025.
By contrast, all of the regions in the southeast and southwest are predicted to underperform. In London, the most expensive place to buy a house in the UK, prices are due to rise by 17.1 per cent over the next five years, marginally worse than the 17.6 per cent growth expected in the southeast.
House prices in the capital have, however, improved a bit more than Cook and his team thought they would so far this year, which they put down to “lower levels of homeworking” pushing people back closer to their offices. They expect that trend to persist into 2025.
Savills said the continuing north-south divide reflected the cheaper prices further north, with mortgaged buyers in those areas “under less strain” from mortgage rates which, although cheaper than a year ago, remain much dearer compared with pre-pandemic.
“Despite falling mortgage rates, buyers in London and the southeast will still need to borrow more relative to their income and accumulate a bigger deposit to buy, constraining house price growth,” Emily Williams, director of research at Savills, said.