UK Property Market Forecasts Slashed as Market Sentiment Weakens

Leading property experts have dramatically reduced their house price growth forecasts for 2025, reflecting mounting concerns over global political tensions and potential tax increases. Estate agency giant Savills has cut its projected growth from 4 per cent to just 1 per cent, whilst property portal Rightmove has halved its forecast to 2 per cent.

The downward revisions come amid a significant shift in market dynamics, with property supply now outstripping demand for the first time in a decade. Lucian Cook, head of residential research at Savills, points to lingering geopolitical uncertainty and reduced buyer activity as key factors behind the adjustment, despite improved affordability conditions since last summer.

Current data from Nationwide reveals annual house price inflation has decelerated to 2.1 per cent, marking a substantial decline from 4.7 per cent recorded at the end of 2024. With consumer price inflation including owner occupiers’ housing costs at 4.1 per cent, house prices are effectively declining in real terms.

The market’s transformation is particularly evident in supply levels, with Rightmove reporting the highest number of available properties in ten years. This surplus has prompted sellers to adopt more competitive pricing strategies, according to Colleen Babcock, Rightmove’s head of partner marketing.

Looking ahead, Savills has adjusted its longer-term outlook, reducing its 2026 forecast to 4 per cent from 5.5 per cent. However, the agency maintains an optimistic view for 2027-2029, predicting cumulative growth of 24.5 per cent by 2029, slightly higher than their previous estimate of 23.4 per cent.

The anticipated relaxation of mortgage affordability tests could provide some support to the market, with Dan Hill from Savills suggesting this might create greater capacity for house price growth and increased transaction volumes in the coming years.