UK House Price Predictions for the Next 5 Years 

If you’re anxious about the future of UK house prices, you’re not alone. Many experts believe that house prices will continue to rise, but there’s no guarantee that this will happen without the right advice. So knowing when and where to buy a property will be at the forefront of many investors’ minds.

According to the Bank of England, the UK may enter recession by Christmas, which may last for more than a year. Also, the bank has raised interest rates, leading to a slowdown in the market. Consequently, you have to stay updated on the latest trends and UK house price predictions for the next 5 years if you’re thinking of buying a home. 

UK House Price Predictions for the Next 5 Years 

Keep in mind that the market could go in either direction, and be prepared to make a quick decision if the market takes a turn for the worse. In this article, we’ll take a closer look at current house price predictions and what you can expect in the years to come. 

So whether you’re already looking to buy a new home or just starting to think about it, read on for some valuable insights on the UK property price forecast for next 5 years and more.

Why House Price Predictions Matter

House price predictions are important because it gives people an idea of how the housing market will change in the next few years. And this information is essential for anyone thinking of buying a home because it can help them decide the best time to invest.

Predictions about the future of the housing market can also help people sell their homes. By knowing what to expect, they can price their home correctly and be more prepared for potential market changes. Overall, house price predictions are valuable for buyers and sellers. They provide a snapshot of where the market is heading and can help people make more informed decisions about their future.

Several factors go into house price predictions. Some of these factors include the current state of the economy, the amount of available housing, and interest rates. Recent changes in the housing market, such as the stamp duty surcharge, can also have a big impact on prices. Other factors like population growth and migration patterns can also play a significant role in determining future prices. 

Why House Price Predictions Matter

Economists keep track of all these different factors when making their predictions. And even if they can’t predict exactly what’s going to happen, you can at least get a sense of which way the market is heading. So if you’re thinking of buying a property in the next few years, it’s a good idea to keep an eye on the UK house price predictions for the next 5 years.

How the Demand for Tenants in the UK is Changing in the Post-Pandemic Residential Market

The post-pandemic residential market is seeing a change in the demand for tenants. Years ago, people were more likely to buy homes. But now, with sky-high property prices and fear of being unable to sell a property in the future, people are choosing to rent instead. This trend is causing a rise in rental prices, as landlords can charge more for a property in high demand.   

Moreso, with the cost of living crisis, this trend will likely continue for the next few years. If it does, it could significantly impact the UK housing market. Many people may find themselves unable to pay for a house, which could lead to a decrease in the number of property purchases. At the same time, if they become less inclined to buy property, prices could start to drop.

On the other hand, if the UK Government steps in to help the public with living costs, the market could come into equilibrium, and interest rates could lower. This would be good news for anyone looking to buy a home because it will lower the amount of money necessary for a down payment.

Will House Prices Increase in the Next 5 Years?

House prices in the UK have been on the rise for the past decade, and experts predict that they will continue to grow over the next five, albeit at a slower pace. Several factors will contribute to this predicted growth, including population growth, limited housing stock, and historically low-interest rates, encouraging more people to buy property.

You may have seen in the news that the UK is predicted to enter a recession this year. Many people will be worrying about how this will impact house prices and will house prices increase in the next 5 years. One may argue that the market fundamentals remain strong, but with the cost of living crisis impacting many people’s expenditures, house prices will likely also be impacted.

Burton is an up and coming property area

Additionally, many analysts predict that house prices growth will increase at a slower pace following the increase in mortgage rates. Mortgage rates in the UK have been low for years now. This made it very affordable for people to borrow money and buy homes. But with the August 2022 increase in the interest rates (from 1.25 to 1.75 per cent), only a select few can afford to borrow to buy a house. 

What Can You Expect to Pay for a House in the UK?

The median house price is currently around £294,260 and is expected to rise by around 16.5 per cent in the next five years, bringing the median price up to £345,755 by the end of 2027. 

If you’re looking to buy a property in the UK, these are the prices you can expect to pay in the next few years. However, keep in mind that these prices will vary depending on the location – for example, London may be more expensive than other parts of the country. 

What are the Regional Variations?

London will remain expensive, and prices in the South East are generally higher than in other parts of the country. But there are also variations within regions. In London, for example, prices vary depending on whether you’re looking in Zone 1 or Zone 2.

Other areas of the UK where you can expect high prices now are Newham, Greenwich, Bromley, and Lewisham. House prices are high in these places because of the imbalance of demand and supply. People love owning houses in these areas because they are well connected to London with world-class transport systems and endless top-notch security. 

London is home to some of the best schools and universities in the country. And the abundance of green spaces and job opportunities also make these places attractive to prospective homeowners. Even though house prices in these areas are on the high side, in the meantime, they may not grow as quickly as in other parts of the UK. Developers are starting to build more homes outside London because of high demand. And if demand increases, prices are likely to increase slowly. 

Since the entry barrier is high, investors and prospective homeowners are considering alternative locations to invest in. So when you’re thinking about investing in properties now, it’s important to consider these regional variations. Otherwise, you might end up breaking the bank to pay for a property.

With H2S connecting the north of the UK in the next few decades, house prices outside of London are expected to go through significant growth. This is because people will no longer need to be within walking distance of the tube to quickly access the capital; however, with H2S not launching until 2029-2033, it’s unclear whether this will impact house prices in the next 5 years.

To avoid the pitfalls and invest in the right area of the UK, work with an expert like Global Residential. We specialise in giving international investors access to the UK property market.

5 Factors that will Impact the UK House Prices in the Next 5 Years

  1. The population is growing: According to the Office for National Statistics (ONS), the UK population has grown at a 15.6 per cent rate over the past decade and is expected to grow at 5.8 per cent. Although the growth may be slow, by 2045, the UK population will be 71.0 million. And this is putting increasing pressure on the housing market. As the population increases, so does the demand for housing.
  2. We’re living longer: People are living longer than ever before, and this is already affecting the housing market. Many homeowners are seniors over the age of 65. These retirees live in homes that are bigger than they need or unsuitable to meet their changing health needs. As a result, they often need to downsize into smaller homes. This creates a demand for about 18,000 new homes a year.
  3. Immigration is on the rise: There has been a big increase in immigration in recent years, and this is putting further pressure on the housing market. As of June 2021, 6 million people living in the UK were of different nationalities. And this 6 million makes up about 9 per cent of the UK’s total population.
    The UK is a popular destination for people who are looking for more favourable working conditions and educational opportunities. People also migrate to the UK for business or to seek asylum. And these people need places to live; thus, the demand for housing increases, and so does the price.
  4. There’s a housing shortage: The number of homes being built in the UK has not kept up with demand, which has led to a housing shortage. The housing crisis’s primary cause is that fewer houses are being built.
    Since the 1980s, when council houses sold off rapidly, public bodies have abandoned large-scale housing construction projects. Thus, the majority of the housing needs in the UK are accounted for by social housing provided by local authorities.
  5. Property is still a good investment: Despite recent price rises, property is still seen as a good investment, and people continue to see it as a way to secure their financial future. While rents may be sky-high, many people still aspire to one day purchase a property. 

While this may take a long time for some people, international investors who want exposure to this asset class can enter the market much more quickly. This allows them to make the most of house price trends and diversify their portfolio.

Keep in Mind

Even though you’re updated on the UK house price predictions for the next 5 years, there may be some slight fluctuations. 

If you’re considering buying a property in the next few years, it’s important to keep this in mind and start saving now. You may also want to consider which areas of the country offer the best growth potential and start scouting out suitable homes in those areas. 

Also, consider speaking to a qualified expert who can advise you on the best time to buy and the areas likely to see the most significant value increases. 

Global Residential has a proven track record in accessing a diverse and exciting range of real estate projects, which offers UK and overseas investors prime investment opportunities in some of the UK’s major cities. Do you want the key into these lucrative investment opportunities? Contact us today to learn more about our development projects.

FAQs about the UK House Prices Next 5 Years

What will happen to house prices in 2023?

The Bank of England base rate may rise to 3 per cent in the second half of 2023. And this rise could, in turn, push average mortgage rates to around 4 per cent and lead to a temporary price dip.

How much will my house be worth in 5 years in the UK?

Based on the prevailing market prediction, your house may be worth about 16 per cent more in the next five years.

Will house prices in the UK ever drop?

The value of the property market never moves in one direction. Even though house prices increase consistently in the long term, factors like a stock market failure, consumer desire to increase savings, and tightening monetary policies can cause a price drop.


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