Mortgage Affordability Boost Fuels Optimistic 5-Year Outlook for UK Housing

According to a recent forecast from property firm Savills, the outlook for UK house price growth has been revised. While Savills has reduced its forecast for house price increases in 2023 due to wider global economic uncertainties, the firm has upgraded its predictions for the next five years.

Savills now expects house prices across Britain to rise by an average of 1.0% this year, down from its previous forecast of 4.0%. However, the firm has upgraded its 5-year outlook, predicting a 24.5% increase in house prices by 2029, up from a previous forecast of 23.4%.

The more optimistic 5-year forecast is attributed to a more relaxed approach to mortgage affordability tests by lenders, which Savills says should support both house prices and the number of home sales. Based on the new forecast, Savills expects the average house price to reach £448,600 by the end of 2029, up from an average of £362,300 by mid-2025.

Despite the slower start to 2023, Savills maintains a positive outlook for the UK housing market overall, anticipating that buyer demand will pick up heading into the autumn, particularly among first-time buyers and mortgaged home movers, driven by an expected base rate cut and a more competitive mortgage market.