Halifax forecasts 'modest' house price growth in 2025

(Sharecast News) - UK house prices are set to grow "modestly" in 2025, Halifax said on Wednesday, following a better-than-expected performance over the last 12 months. According to the mortgage lender's UK housing market review and outlook, published on Wednesday, the average UK house price now stands at £298,083, an increase of £13,641.

Halifax said it was a "record" high, with the past peak prior to 2024 being June 2022, when the average house price reached £293,507.

Prices dipped just once during the year, by 0.9% in March.

However, looking ahead to 2025, Halifax said there would likely only be "modest" house price growth, in the range of 0% and 3%, alongside a further small increase in transaction.

It noted: "As with recent years, forecast uncertainty remains high given the current economic environment."

Amanda Bryden, head of Halifax mortgages, said two factors had driven the recovery over the last year.

"The first is lower mortgage rates, at times up to 160 basis points below the peaks of 2022 and 2023," she said.

"Second is that income growth continues to catch up with the consumer price increases of the past few years."

However, looking ahead Bryden noted: "There's no doubt that mortgage affordability remains a challenge for many buyers.

"While further cuts to Bank Rate are still on the cards, the pace looks likely to be more gradual that previously anticipated, and many homeowners with older fixed-rate deals ending next year face refinancing at much higher rates."

The Bank of England, which has trimmed the cost of borrowing twice this year, to 4.75%, meets on Thursday for its final interest rate decision of 2024.

While GDP has been shrinking, inflation remains persistent, particularly in the services sector, however, and the Monetary Policy Committee is widely expected to leave rates on hold as a result.

On Monday, fellow mortgage lender Nationwide forecast house prices growth of between 2% and 4% for 2025.