British home prices to rise 3.5% this year; government to miss 5-year building target: Reuters poll
25th May 2025
According to a Reuters poll conducted between May 19 and May 29, 2025, UK home prices are expected to rise by 3.5% this year, maintaining the forecast from February. This increase is attributed to expectations of falling borrowing costs and ongoing housing shortages. Nationally, home prices are projected to grow by 4.0% in 2026 and 3.5% in 2027. In London, prices are anticipated to rise by 3.0% in 2025, 4.0% in 2026, and 3.8% in 2027.
Despite Prime Minister Keir Starmer’s pledge to build 1.5 million homes by mid-2029, the poll indicates the government will likely achieve only around one million. None of the 11 respondents believe the target will be fully met, with estimates ranging from 700,000 to 1.3 million homes. Analysts point to limited capacity and lack of financial incentives among top builders as significant constraints.
Affordability for first-time buyers is expected to improve due to anticipated interest rate cuts, with the Bank of England projected to reduce rates quarterly, ending 2025 at 3.75%. However, rising urban rents—forecasted to increase by 4.3% nationally and 3.7% in London—continue to challenge savings for down payments. The government’s Renters’ Rights Bill and tax changes may further impact the rental market by prompting some landlords to exit.
The housing market experienced a slowdown in April following the end of a temporary tax break on home purchases. Nevertheless, future home price increases are expected, with forecasts of 4.0% in 2026 and 3.5% in 2027, mirroring London’s upward trend.