Will UK House Prices Fall in 2025? What the Data Tells Us

UK Housing Market Trends Heading into 2025

The picture heading into 2025 is complex but not chaotic. After a sharp post-COVID boom, house price growth slowed significantly through 2023 and 2024. While some analysts predicted a major correction, that didn’t fully materialise.

The result? A market that’s cooled but not collapsed.

According to recent data, the annual rate of house price growth turned flat in late 2024, with some regions seeing small declines

Northern Ireland and the North West bucked the trend, recording modest price gains, largely due to lower base prices and stronger buyer demand

Meanwhile, London and parts of the South West saw prices fall, particularly for smaller property types with higher purchase costs

A key driver of this shift was the Bank of England’s decision to hold the bank rate above 5% for much of 2024. As a result, mortgage rates climbed, lenders tightened affordability checks, and the number of completed house purchases dropped.

By the final quarter, however, the market began adjusting. Rightmove data showed a slight uptick in home movers, especially in areas where stamp duty thresholds kept upfront costs lower. Transaction volumes improved as potential buyers recalibrated their budgets.

To understand whether UK house prices will fall in 2025, we need to look at the core forces shaping the property market today.

1. Interest Rates and Mortgage Affordability

Despite falling inflation, mortgage rates remain relatively high due to the elevated bank rate. Even with talk of further rate cuts, the cost of borrowing is still impacting demand, especially for first time buyers.

• Higher borrowing costs are capping what buyers can afford
• Fewer mortgage approvals are being issued for high-value loans
• Many buyers are choosing smaller property types or pausing entirely

2. Stamp Duty and Additional Tax Costs

The reversal of stamp duty holidays and the reintroduction of lower stamp duty thresholds have also affected house purchases. Buyers now face stamp duty bills that were previously reduced or removed, especially in London and higher-value areas.

This creates additional tax obligations that limit affordability

Expect more attention on the October Budget, which may include duty threshold adjustments

3. Inflation, Wage Growth, and Household Budgets

• Inflation has eased, but not fully, and household budgets remain tight. Although wages are growing, the increase has not yet offset years of rising living costs.
• Affordability continues to be a major constraint, particularly for many buyers outside dual-income households
• Buyers are more sensitive to price points, especially in the £200k–£350k range

4. Broader Economic Conditions

The global economy, supply chains, and trade tariffs continue to shape developer costs and buyer confidence. Bond markets are showing signs of recovery, but volatility remains.

According to Nationwide’s chief economist, Robert Gardner, the market is “cooling, but not crashing.” He highlights a cautious but resilient housing sector, especially in regional markets with lower average prices and strong local demand.

What the Experts Are Predicting for 2025

Forecasts from major analysts offer a more stable outlook for the UK property market in 2025. None predict a significant collapse, but neither do they forecast rapid growth.

House Price Growth Forecasts:

• Knight Frank: +3.5% by year-end
• Savills: +2.0%
• OBR (Office for Budget Responsibility): +2.8%

These forecasts suggest a modest rebound, especially in the second half of the year, as interest rates are expected to ease and buyer confidence returns. However, gains are likely to vary across regions.

Regional Highlights:

• Northern Ireland: +4% projected, continuing a strong 2024
• North East: Attracting buyers priced out of southern cities
• South East/London: Flat or negative in some areas due to higher purchase costs

Overall, house price predictions are trending upward, but only just.

Will House Prices Fall in Some Regions?

Yes, in specific locations, house prices may see small declines. These tend to be areas with:

• High exposure to buy-to-let investment, where investors are exiting the market
• Over-reliance on government schemes like Help to Buy, which supported inflated values
• Limited buyer pool due to high duty and tax costs

Price softening is expected in:

• Certain commuter belts of London and South East
• Over-supplied apartment markets in mid-sized cities
• Locales affected by delayed infrastructure or commercial slowdown

But it’s important to stress, this is not a crash. It’s a correction and a realignment based on new affordability thresholds.

Demand and Supply Pressures in 2025

A major reason UK house prices are not expected to fall sharply is the ongoing mismatch between housing supply and buyer demand.

Here’s why:

• New home completions remain below target across England
• Planning backlogs and environmental constraints continue to delay delivery
• Rental demand is pushing some renters into the ownership market, especially in cities like Manchester, Bristol and Cardiff
• Smaller building societies and lenders are re-entering the market with tailored mortgage products, supporting activity at the lower end

The property market may be under pressure, but with fewer homes available than needed, prices are likely to remain supported.

What Buyers and Sellers Should Know

For Buyers:

• Be realistic about what your budget can stretch to
• Monitor stamp duty changes, particularly if buying near thresholds
• Look outside city centres for better value and affordability
• If rates drop, expect more competition in the coming months

Using platforms like Zoopla can help buyers compare listings, track local price trends, and understand what’s selling in specific postcodes. It’s crucial for setting expectations and acting quickly in a competitive market.

For Sellers:

• Set a realistic asking price, overpricing leads to slow transactions
• Highlight energy efficiency and space flexibility
• Expect more negotiation, particularly in areas with slower turnover
• Be prepared to move fast if serious buyers emerge

For Investors:

• Focus on locations with steady demand and modest price growth
• Consider rental yields and tax implications under new policy
• Avoid areas where prices fell sharply in 2024 without clear recovery signs

Final Thoughts: Will House Prices Fall in 2025?

In short, UK house prices in 2025 are not expected to fall dramatically. Some regional variations will occur, and individual postcodes may see minor declines. But the data points toward stabilisation, not crisis.

With mortgage rates, taxes, and affordability shaping every decision, the market is adjusting to a slower, more sustainable rhythm. The question isn’t so much will prices fall, but rather where will they hold, and where will they quietly recover?

At Hometrack, we’re helping buyers, sellers, and investors make better decisions in this more nuanced landscape, using data, not assumptions. Whether it’s price benchmarking, property market forecasting or transaction analysis, our tools are built to deliver clarity.

Want to stay ahead of what’s happening next? Get in touch and explore the Hometrack Data Hub to make confident, informed moves in the UK housing market this year.