Falling Mortgage Rates To Drive Uk House Price Growth

Falling mortgage rates will boost affordability, driving UK house prices up 4% in 2025 and 23.4% by 2029 amid strong demand and housing shortages.

The UK housing market is expected to see continued price growth in the coming months and years, with forecasts predicting a 4% rise in 2025 and a potential 23.4% increase by 2029. A key factor behind these projections is the expectation that mortgage rates will fall, making borrowing more affordable and increasing demand for property.

Over the past two years, higher interest rates have placed significant pressure on buyers, limiting affordability and dampening market activity. However, with inflation gradually easing, the Bank of England is expected to continue lowering the base rate, which will, in turn, reduce mortgage rates. As borrowing becomes cheaper, more prospective buyers—particularly first-time buyers and those looking to move up the property ladder—are likely to enter the market, driving demand and pushing prices higher.

Lower mortgage rates also have the potential to boost confidence among both buyers and sellers. When financing costs decrease, buyers feel more secure in making long-term commitments, while sellers are more likely to achieve their asking prices. This renewed confidence is likely to translate into greater transaction volumes, creating a more active and competitive market.

Regional differences will play a role in how much house prices rise, with areas benefiting from strong employment growth, regeneration, and transport infrastructure improvements likely to see the highest demand.

While affordability challenges remain, the expected decline in mortgage rates is set to reinvigorate the housing market, supporting steady price growth in the years ahead. For buyers and investors, this presents an opportunity to enter the market before prices climb even higher.