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01 Nov, 2023

UK House Prices to Fall Until 2025

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    Lloyds Predicts House Price Growth in 2025 at Earliest

    According to Lloyds Banking Group predictions, UK house prices will rise in 2025 at the earliest.

    Prices will continue to fall this year and well into 2024. However, 2025 should see the market pick up steam again, rewarding UK buy-to-let investors with a long-term mindset.

    Lloyds predicted that by the end of the year, prices will have decreased 5%. They also forecast an additional 2.4% drop in 2024.

    While this may not sound like good news if you were planning to sell right now, the signs are clear: the market is stabilising – albeit slowly.

    Property buyers are taking home keys from sellers. Buying a property for investment purposes.

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    What Does Lloyds UK House Price Forecast Suggest?

    The Lloyds forecast – released on Wednesday, 25th October – suggests prices have fallen by 11% from their 2022 peak, when the market benefitted from an influx in larger home purchases following the COVID-19 pandemic.

    The banking groups’ economists predicted a 2.3% rise in house prices in 2025. As such, buy-to-let landlords may want to enter the market now before they miss the opportunity to purchase lower-priced properties.

    With rental demand at a high, landlords can expect substantial gross yields across the UK, particularly in the North West and other parts of northern England.

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    What Did Lloyds Say About the Housing Market?

    CFO Willliam Chalmers said the following about the 2023 housing market:

    “The housing market in 2023 has been a little bit softer than we saw in previous years. Having said that, as you know, there has been an increase generally in the housing market for a number of years to date, and so we’re retracing a part of those steps.”

    Man counting house price, home insurance cost, property value or rent on paper. Realtor or real estate agent writing offer. Mortgage, saving and buying apartment. Money and small building on table.

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      How Does the Property Market Look Right Now

      According to the HM Land Registry UK House Price Index, the average UK property price is £291,044. The index states a 0.2% growth over the last year.

      In addition, the average rent is £1,276 PCM (per Homelet Rental Index), putting the average yield at 5.26%. Rent has increased by over 10% in the past year.

      However, some areas have much higher rental yields – such as Liverpool, Manchester and numerous other desirable locations up north.

      Rental demand is high due to the cost-of-living crisis, forcing more people into the private rented sector. As such, rents are expected to increase further – the RICS predicted a 5% rise over the next year.

      City Residential Estate Agents noted a 12% rise in rents for buy-to-let apartments in Liverpool. It is easy to see why – Liverpool boasts fantastic transport links and huge regeneration potential. The Knowledge Quarter and Baltic Triangle have transformed into cool places for young professionals to live.

      With property prices dropping, rental yields should continue to increase well into 2024. While nobody can predict any unforeseen effects on the property market in the near future, the Lloyds forecast suggests the market is on course to correct itself over the next few years, making now a potentially good time to invest in property.

      Looking for advice on property investment?

      RWinvest has the latest insights to assist investors every step of the way, whether you’re looking at off-plan property or below-market-value houses for sale!

      Residential area in Liverpool - LIVERPOOL, UNITED KINGDOM - AUGUST 16, 2022
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      Dale Barham

      Dale is a property content writer at RWinvest. Keeping a close eye on the UK property market, Dale helps our readers stay informed and up to date on the latest market news and statistics.

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