UK house prices are expected to increase next year as borrowing costs and affordability constraints ease, Nationwide said on Monday.
Property are expected to rise by 2% to 4% in 2025, despite a hike in the stamp duty levy that will take effect from April, the mortgage lender said.
“Providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth,” said Robert Gardner, Nationwide’s chief economist.
“Upcoming changes to stamp duty are likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax.”
Nationwide said the changes may lead to a surge in transactions in the January-March period, with a corresponding period of weakness in the following three to six months.
Meanwhile, Jackson-Stops has forecast a potential 4% increase in UK house prices for 2025.
The estate agency said it expected house prices to stay similar to 2024, with more than a third of their agents predicting stable prices, and another third anticipating a 2% to 4% rise.
The agency agrees with Nationwide that the start of 2025 could be busy as buyers act before current stamp duty incentives expire.
Agents described the 2025 market as ‘challenging’, ‘balanced’, and ‘competitive’.
Nick Leeming, chairman of Jackson-Stops, anticipated “a period of stability and soft growth.”
Leeming added: “We anticipate that this stability will encourage more people to enter the market, whether they are first-time buyers or those looking to move up the property ladder.”
Leeming noted that the prime market was likely to see significant activity due to increased buyer confidence and a stable economic outlook, which could benefit all stages of the property chain.
Leeming continued: “Overall, the outlook for 2025 is quietly optimistic with demand moving in the right direction following a cautious 2024.”
