House prices are expected to rise by 20% in the next five years as lower mortgage rates bring buyers back to the market.
‘With the October Budget behind us, the outlook for both prices and rents remains positive. The government is forging ahead with its plan to deliver more homes, but it will take some time before we see any real impact on overall supply.
With the October Budget behind us, the outlook for both prices and rents remains positive. The government is forging ahead with its plan to deliver more homes, but it will take some time before we see any real impact on overall supply.
Lack of supply and more competitive mortgage rates are expected to underpin growth in prices over the next five years. Rental growth is expected to exceed inflation and wages over the five-year forecast period, but an increase in activity in the sales market means rental growth is expected to lag price growth, with rents forecast to be 17% higher by the end of 2029.’
House price forecasts
‘A new government with ambitious plans for housebuilding and more comfortable with a higher tax environment, particularly for wealthier households, could mean future growth prospects differ from the recent past. But neither of the these seem a sufficient departure from the current trend to meaningfully change the path of growth over the coming five-year period (2025-2029).
We do expect higher rates (even if they fall back from current levels) will limit growth prospects, meaning our 2025-2029 forecasts sit at the lower end of the recent five-year averages.
We expect growth of 19.9% nationally 2025-2029. London house prices are expected to increase by 21.6% over the same period, underpinned by a lack of new homes reaching the market for sale. We expect lower value markets to see stronger growth towards the beginning of our five-year forecast period, with more expensive markets outperforming once the rate-cutting cycle continues into 2026 and 2027.’
Rental price forecasts:
‘In the five years to September 2024, rents rose nationally by 27%. But the rapid rise in rents in the last three years isn’t reflective of the long-term trend. Five-year growth figures in early 2020 sat at around 12%, when rents broadly tracked wage growth.
The supply-demand imbalance which has in part driven rent rises (wage growth and inflation also contributed) is now becoming more balanced, but a lack of new stock entering the market means we anticipate rental growth will exceed wage growth and inflation over the next five years.
The October Budget did little to change our view. Capital Gains Tax for residential property remained the same, meaning exit costs didn’t rise, but entry costs did. Landlords looking to purchase homes now having to pay an additional 2% stamp duty over the previous already elevated bill. We expect this will mean more traditional buy-to-let landlords will leave the market than enter over the next five years.
But activity in the sales market is expected to increase too, likely meaning an increase in tenants moving across into owner occupation, alleviating some demand side pressures in the short term.
JLL forecasts UK rents will rise 17% over the next five years, with rental growth in the London expected to total 18% over the same period.’
Original Source: JLL Residential Forecast 2025-2029
Next steps
Investing in rental property can be a difficult decision to manoeuvre but here at E.R.E Property, we are here to help. If you are interested in investing in UK property, call us on +44 (0) 113 380 8930 and speak to one of our expert investment consultants.
QUICK TIP: Scroll down just a little bit further to download our FREE guide to off-plan investing.
