The property market in the UK has been turbulent for several years now. With Brexit, COVID, the War in Ukraine and the wider cost of living crisis all having negative impacts, it’s been a difficult period for all concerned. However, we may be starting to see the green shoots of growth and a return to better times for buyers, sellers and developers alike.
In this blog, we’re going to explore what we expect to see in 2025 and beyond, and why the time might be right to get started on your next project.
Growing House Prices in 2024 and 2025
After years of uncertainty, and based on a strong start to 2024, property firm Savills has recently upgraded its five-year house price forecast. After predicting a 3% contraction for 2024 in November 2023, decreases in the costs of mortgage debt have led them to revise the prediction to a 2.5% growth by the end of 2024, and a 21.6% growth by the end of 2028.
Additionally, they expect to see 1.05m housing transactions in 2024, up from their original prediction of 1.01 in 2023.
Mainstream UK house price forecasts (2024-2028)
Lucian Cook, head of residential research at Savills, said
“The market for 2024 [and beyond] has improved since our last (November 2023) forecasts. The outlook for economic growth has also slightly improved, pointing to relatively modest house price growth this year, with greater potential over the following few years.
Improving economic performance, combined with steady cuts to the base rate, will open up greater capacity for growth from 2025. But without the previously expected falls at the start of our forecast period, affordability constraints will become a factor towards the end of the period, particularly in the already stretched markets of London and the South East,”
Savills expect to see a total increase of 18.2% in house prices in the South East by the end of 2028, a prediction that will be music to the ears of property developers here.
Decreasing Mortgage Rates in 2025?
We may see a decrease in mortgage rates over the coming months and years, after the highs of Liz Truss’ disastrous mini-budget in 2022. Figures from data provider Moneyfacts, show that the average rate of a two-year had dropped to 5.77% at the start of August 2024, down from 5.95% the month previous.
In the same period, data from Nationwide showed a 0.3% increase in house prices for the third month in a row, higher than the 0.1% rise forecasted.
Although it will take a while to see more substantial impacts on the housing market and buyer sentiment, it’s nonetheless good news for property developers who have been holding fire on their planned projects. As mortgage rates drop and average wages increase, buyers may return to the market.
Furthermore, as Aneisha Beveridge, head of research at Hamptons says, a feel-good factor from the recent change in government and its 1.5 million housebuilding target may further stimulate growth.
However, it’s important to consider regional variations and factors that impact housing. Although we seem to be seeing early signs of good news, the housing market will take a while to fully recover. Increasing energy prices in Autum 2024, and the ongoing cost of living crisis are still major factors in the UK economy that affect buyer’s ability to move
Property Development in South East
London and the South East remain a property hot spot in the UK, with a resilient market and high demand making it a desirable place to develop. With lots of commuter towns, as well as large cities like Brighton, Southampton and Portsmouth, it’s one of the most populated areas of the UK and carries a high demand for properties.
At Hunter Finance, we’re always eager to speak to talented and exciting property developers to bring your projects to reality. We offer a wide range of property development finance options, as well as plenty of local knowledge and a personal touch to help you succeed. Contact us today to find out more.
