The average UK house price could surpass the £300,000 threshold this year, as market sentiment is further buoyed by an increasing number of buyers returning to the market.
That’s according to the latest forecast by West One Loans which also suggests that this increase in demand should allow developers to release equity in existing schemes at a greater pace and break ground on their next project – bringing more new homes to market in the process.
West One points to data showing that monthly mortgage approvals have sat north of the 60,000 per month threshold since February of last year and, with buyers returning to the market in their droves, the average UK house price currently sits 3.3% higher than it did this time last year (Nov 24 – latest figure available).
The overarching opinion from the industry, according to West One, is that 2025 is set to be a year for greater positivity when it comes to house prices. To support this, all of the major industry commentators were in agreement over the last few months that house prices would increase in 2025, albeit at varying rates.
The most modest came from the OBR who are forecasting a 1.1% increase, with many of the big agents, such as Savills, JLL, Chestertons and Hamptons expecting an increase of between 3-4%, whilst the CEBR have gone as far as estimating a 4.1% increase.
The forecast from West One Loans sits largely in line with those predicting a more buoyant picture for the year ahead. The firm’s analysis of current and historic Gov data, seasonally adjusted to account for seasonal market fluctuations throughout the year, estimates that the average UK house price could climb by 3.5% to 3.9% over the course of 2025.
Should the market meet this expectation based on the upper confidence level of the forecast by West One Loans, it would see the average UK house price tip the £300,000 threshold to hit £303,913.
West One Loans co-head of short-term finance Thomas Cantor, commented: “The outlook for the year ahead is that the market will continue to improve from the ground made in 2024 and we’ve already seen a strong start to the year from those looking to utilise specialist lenders in order to capitalise on the growing opportunities that are emerging due to current market momentum.”
He added: “We’ve seen a slowdown with respect to demand for new-build homes and this has meant that developers have seen a great deal of equity tied up in existing developments, which has prevented them from pushing forward on their next project.
“However, this tide is certainly starting to turn and, with the expectation of a more buoyancy market over the next 12 months, we’re now seeing these clients turn their focus to their next project and look to specialist lending to help get the ball rolling.”
