House prices experiencing significant recovery, fastest in the past two years.
In the current economic climate, the UK housing market continues to show resilience, with increased buyer demand driving the market forward. Robert Gardner, chief economist at Nationwide, predicts that the housing market will continue to strengthen gradually as affordability constraints ease.
The approaching stamp duty deadline in April 2023 has caused a flurry of activity in the market, as buyers look to secure stamp duty relief. This surge in demand, as Marc von Grundherr, director of Benham and Reeves, notes, has once again started to accelerate the market, demonstrating its current strength.
Despite the economic headwinds, the market remains positive, according to various industry experts. Guy Gittins, CEO of Foxtons, also confirms this trend, stating that the market is once again starting to accelerate.
Over the last 12 months, there has been a significant increase in new buyer volumes, viewings, and offers made. This increase in demand will likely push house prices up over the coming months, as reported by Nationwide's Housing Index, which shows house prices rose by 3.7% year-on-year last month.
However, it's important to note that the market is not without its balances. There is a healthy level of stock currently on the market, preventing the market from overheating due to a supply and demand imbalance.
Looking ahead, predictions indicate that UK house prices in 2023 and beyond are expected to experience modest growth or slight declines rather than a sharp crash. After a period of rapid price increases during the pandemic, the market is now normalizing due to high inflation, increased mortgage rates, and the fading of previous fiscal incentives.
As of mid-2025, house prices are rising slowly, with Zoopla projecting around a 1% increase for 2025, and an average UK house price near £268,400, which is about 1.4% higher than a year earlier. Price growth varies by property type, with terraced and semi-detached houses seeing modest rises, while flats and maisonettes have experienced slight declines.
Rightmove slightly downgraded its 2025 growth forecast to 2%, partly due to easing mortgage regulations potentially enabling more first-time buyers to enter the market and increasing transaction volumes. Despite earlier headlines predicting significant house price drops (8-15%), actual data by mid-2025 shows prices roughly stable or slightly increased compared to early 2023.
The recent UK Autumn Budget and fiscal stimulus may support buyer activity and ease mortgage affordability, mildly cushioning the impact of higher interest rates. The start of next year is anticipated to continue this trend, with buyers rushing to take advantage of current stamp duty relief thresholds.
However, the market could potentially slow again due to high interest rates and added fiscal stimulus from the Autumn Budget. The normalization of the market, as seen in the past few months, suggests that it is adapting to these changes and finding a new equilibrium.
In other news, the Northeast development is in the final stage of construction, which could contribute to the regional housing market's growth in the near future. As always, it's essential to stay informed about the latest developments in the housing market to make informed decisions about buying or selling a property.
References:
- UK House Prices: Forecast 2023-2028
- UK House Prices 2025: What to Expect
- Rightmove Downgrades 2025 House Price Growth Forecast
- UK House Prices: Stable or Slightly Increased
Investors in the UK housing market are keeping a close eye on the approaching stamp duty deadline in April 2023, as it may prompt increases in real-estate investments due to the potential for stamp duty relief. The current strength of the housing market, as demonstrated by the increased demand and house price rises shown by Nationwide's Housing Index, could make housing-market investing an attractive proposition.
The UK housing market forecast for 2023 and beyond suggests minimal growth or slight declines, rather than a sharp crash, as the market continues to normalize in response to high inflation, increased mortgage rates, and the fading of previous fiscal incentives. With predictions of modest growth over the coming years, investing in housing might still yield returns amidst this moderate market stability.
