Just as in many other countries, the housing market in the UK grew substantially during the coronavirus pandemic, fueled by robust demand and low borrowing costs. Nevertheless, high inflation and the increase in mortgage rates has led to house price growth slowing down. According to the forecast, 2024 is expected to see house prices decrease by three percent. Between 2024 and 2028, the average house price growth is projected at 2.7 percent. A contraction after a period of continuous growth In June 2022, the UK's house price index exceeded 150 index points, meaning that since 2015 which was the base year for the index, house prices had increased by 50 percent. In just two years, between 2020 and 2022, the index surged by 30 index points. As the market stood in December 2023, the average price for a home stood at approximately 284,691 British pounds. Rents are expected to continue to grow According to another forecast, the prime residential market is also expected to see rental prices grow in the next years. Growth is forecast to be stronger in 2024 and slow down in the period between 2025 and 2028. The rental market in London is expected to follow a similar trend, with Central London slightly outperforming Greater London.

Inflation-adjusted house prices in the United Kingdom (UK), continued to decline in the second quarter of 2023 - a trend that started in the fourth quarter of 2022. The nominal house price grew by 1.77 percent in the second quarter of 2023, but when adjusted for inflation, there was a decline of 6.15 percent.

During the COVID-19 pandemic, the number of house sales in the UK spiked, followed by a period of decline. In 2023, the housing market slowed notably, and in September 2024, transaction volumes fell below 50,000. House sales volumes are affected by a number of factors, including mortgage rates, house prices, supply, demand, as well as the overall health of the market. The economic uncertainty and rising unemployment rates has also affected the homebuyer sentiment of Brits. How have UK house prices developed over the past 10 years? House prices in the UK have increased year-on-year since 2015, except for a brief period of decline in the second half of 2023 and the beginning of 2024. That is based on the 12-month percentage change of the UK house price index. At the peak of the housing boom in 2022, prices soared by nearly 14 percent. The decline that followed was mild, at under three percent. The cooling in the market was more pronounced in England and Wales, where the average house price declined in 2023. Conversely, growth in Scotland and Northern Ireland continued. What is the impact of mortgage rates on house sales? For a long period, mortgage rates were at record-low, allowing prospective homebuyers to take out a 10-year loan at a mortgage rate of less than three percent. In the last quarter of 2021, this period came to an end as the Bank of England rose the bank lending rate to contain the spike in inflation. Naturally, the higher borrowing costs affected consumer sentiment, urging many homebuyers to place their plans on hold and leading to a drop in sales.

The UK residential real estate market, valued at approximately £360.27 billion in 2025, is projected to experience robust growth, driven by several key factors. Strong population growth, particularly in urban centers, fuels consistent demand for housing, while low interest rates and government initiatives aimed at boosting homeownership further stimulate market activity. The market is segmented into apartments and condominiums, and landed houses and villas, with each segment exhibiting unique growth trajectories. Apartments and condominiums, particularly in London and other major cities, are expected to see higher demand due to affordability concerns and lifestyle preferences, while landed houses and villas continue to appeal to those seeking more space and privacy, particularly in suburban or rural areas. Competition among major developers such as Berkeley Group, Barratt Developments, and others influences pricing and construction activity. While challenges exist, such as fluctuating economic conditions and rising construction costs, the overall outlook for the UK residential real estate market remains positive. The market's performance is also influenced by broader economic factors, such as inflation and employment rates, and is likely to see regional variations, with London and the South East generally commanding higher prices. The market's growth is expected to continue through 2033, with a compound annual growth rate (CAGR) of 5.75%. This growth will likely be influenced by factors such as evolving demographic trends (including increasing urbanization and family sizes), government policies impacting the housing market, and technological advancements impacting the construction and sales processes. International investment continues to play a significant role, especially in prime London properties. However, the market is susceptible to external shocks, such as changes in interest rates or economic downturns. Understanding these factors is crucial for investors and stakeholders operating within the UK residential real estate sector. Market analysis suggests continued demand for sustainable and energy-efficient housing, influencing the development of future projects. This comprehensive report provides an in-depth analysis of the UK residential real estate market, covering the period from 2019 to 2033. With a base year of 2025 and a forecast period spanning 2025-2033, this research offers invaluable insights for investors, developers, and industry professionals seeking to navigate this dynamic market. The report leverages extensive data analysis, covering key segments, emerging trends, and major players, to provide a clear understanding of market dynamics and future growth potential. High-search-volume keywords like UK property market, UK house prices, London property market, UK residential real estate investment, build-to-rent UK, multifamily UK, and UK housing market forecast are integrated throughout to ensure maximum online visibility. Recent developments include: May 2023: A UAE-based investment manager, Rasmala Investment Bank, has launched a USD 2bn ( €1.8bn) UK multifamily strategy for a five-year period to build a USD 2bn portfolio of UK residential properties. The strategy is focused on the UK market for multifamily properties through a Shariah-compliant investment vehicle, initially targeting the serviced apartment (SAP) and BTR (build-to-rent) subsectors within and around London. Seeded by Rasmala Group, the strategy is backed by an active investment pipeline for the next 12 – 18 months., November 2022: ValuStrat, a Middle East consulting company, increased its foothold in the UK by acquiring an interest in Capital Value Surveyors, a real estate advisory services company with offices in London. The UK continues to be one of the most established real estate markets worldwide and attracts foreign investors regularly. They are excited to expand their presence there to better serve all of their clients, both in the UK and the Middle East.. Key drivers for this market are: Demand for New Dwellings Units, Government Initiatives are driving the market. Potential restraints include: Supply Chain Disruptions, Lack of Skilled Labour. Notable trends are: Increasing in the United Kingdom House Prices.

The UK housing market continued to show significant regional variations in 2024, with London maintaining its position as the most expensive city for homebuyers. The average house price in the capital stood at 519,579 British pounds in October, nearly double the national average of 292,059 British pounds. However, the market dynamics are shifting, with London experiencing only a modest 0.2 percent annual increase, while other cities like Newcastle upon Tyne and Belfast saw more substantial growth of 8.8 percent and 6.8 percent respectively. Affordability challenges and market slowdown Despite the continued price growth in many cities, the UK housing market is facing headwinds. The affordability of mortgage repayments has become the biggest barrier to property purchases, with the majority of the respondents in a recent survey citing it as their main challenge. Moreover, a rising share of Brits have reported affordability as a challenge since 2021, reflecting the impact of rising house prices and higher mortgage rates. The market slowdown is evident in the declining housing transaction volumes, which have plummeted since 2021. European context The stark price differences are mirrored in the broader European context. While London boasts some of the highest property prices among European cities, a comparison of the average transaction price for new homes in different European countries shows a different picture. In 2023, the highest prices were found in Austria, Germany, and France.

House prices in the UK rose dramatically during the coronavirus pandemic, with growth slowing down in 2022 and turning negative in 2023. The year-on-year annual house price change peaked at 14 percent in July 2022. In June 2024, house prices increased by 2.7 percent. According to the Nationwide Building Society, the average house price exceeded 265,000 British pounds in 2022. Correction in housing prices: a European phenomenon The trend of a growing residential real estate market was not exclusive to the UK during the pandemic. Likewise, many European countries experienced falling prices in 2023. When comparing residential property RHPI (price index in real terms, e.g. corrected for inflation), countries such as Germany, France, Italy, and Spain also saw prices decline. Sweden, one of the countries with the fastest growing residential markets, saw one of the largest declines in prices. How has demand for UK housing changed since the outbreak of the coronavirus? The easing of the lockdown was followed by a dramatic increase in home sales. In November 2020, the number of mortgage approvals reached an all-time high of over 107,000. One of the reasons for the housing boom were the low mortgage rates, allowing home buyers to take out a loan with an interest rate as low as 2.5 percent. That changed as the Bank of England started to raise the base lending rate, resulting in higher borrowing costs and a decline in homebuyer sentiment.

In 2022, house price growth in the UK slowed, after a period of decade-long increase. Nevertheless, in August 2024, prices reached a new peak, with the average home costing close to 290,000 British pounds. That figure refers to all property types, including detached, semi-detached, terraced houses, and flats and maisonettes. Compared to other European countries, the UK had some of the highest house prices. How have UK house prices increased over the last 10 years? Property prices have risen dramatically over the past decade. According to the UK house price index, the average house price has grown by over 50 percent since 2015. This price development has led to the gap between the cost of buying and renting a property to close. In 2023, buying a three-bedroom house in the UK was no longer more affordable than renting one. Consequently, Brits have become more likely to rent longer and push off making a house purchase until they have saved up enough for a down payment and achieved the financial stability required to make the step. What caused the decline in house prices in 2022? House prices are affected by multiple factors, such as mortgage rates, supply, and demand on the market. For nearly a decade, the UK experienced uninterrupted house price growth as a result of strong demand and a chronic undersupply. Homebuyers who purchased a property at the peak of the housing boom in July 2022 paid 14 percent more compared to what they would have paid a year before. Additionally, 2022 saw the most dramatic increase in mortgage rates in recent history. Between December 2021 and December 2022, the 10-year fixed mortgage rate doubled, adding further strain to prospective homebuyers. As a result, the market cooled, leading to a correction in pricing.

Since 2015, the gap between the cost of buying a home and renting has grown, with homeownership becoming increasingly less affordable. In the third quarter of 2024, the house price to rent ratio in the UK stood at 114.6. That meant that house price growth has outpaced rental growth by nearly 15 percent between 2015 and 2024. The UK's house price to rent ratio was slightly below the average Euro area ratio. House price to income ratio in the UK Another indicator for housing affordability is the house price to income ratio, which is calculated by dividing nominal house prices by the nominal disposable income per head. The ratio saw an overall increase between 2015, which was tthe base year, and 2022. After that, the index declined, but remained close to the average for the Euro area. Is it more affordable to rent or buy? There are many things to be considered when comparing buying to renting, such as the ability to qualify for a mortgage and whether prospective homebuyers have sufficient savings for a deposit. Generally, purchasing a home is more affordable than renting one. However, the average monthly savings first-time buyers can achieve have been on the decline. In East of England, where house prices have increased rapidly over the past few years, it was cheaper to rent than to buy in 2022.

England accounts for the majority of sales in the residential real estate market in the United Kingdom. In September 2024, the total number of housing transactions in the country amounted to nearly 92,000, with approximately 80,000 of these property sales being completed in England. Historically, sales activity has observed notable fluctuations because of the seasonal nature of the market, but also other trends in the market, such as the slump in April 2020 related to the COVID-19 pandemic A declining number of home sales The annual number of home sales in the UK has declined since 2021, with 2023 exhibiting the lowest transaction volume since 2012. The main reason for that trend is the increase in the cost of housing. House prices grew year-on-year between 2012 and 2022, with growth accelerating toward the end of the period due to the record-low mortgage rates. As the cost of living crisis hit in 2022, the Bank of England hiked interest rates, resulting in dramatically higher home finance costs. With house prices at their peak and a double increase in borrowing costs, many prospective homebuyers could not afford to buy and placed their plans on hold. How will prices develop in the next five years? After a slight decline in 2024, house prices in the UK are expected to pick up in the next year and continue on an upward trend until 2028. On average, house prices are projected to grow by 2.7 percent per year.

Residential building contractors are contingent on the propensity of property developers to invest in new ventures; movements in property prices; government schemes intended to boost the housing supply; and underlying sentiment in the housing market. Industry contractors have endured turbulent operating conditions over the past five years, leading to volatile shifts in revenue and profitability. Revenue is forecast to grow at a compound annual rate of 1% over the five years through 2024-25, reaching £97.4 billion. The pandemic caused a significant drop in output in 2020-21, as restrictions placed on on-site activity and fewer enquiries for new housing units reduced revenue opportunities. Aided by government support for the housing market and the release of pent-up demand, 2021-22 was characterised by a strong rebound in activity, though materials and labour shortages maintained constraints on output. Mounting supply chain disruption and heightened economic uncertainty maintained pressure on output in the following year, though revenue growth was maintained by growth in average selling prices. Interest rate hikes and inflationary pressures led to a more subdued housing market in 2022-23, holding back the number of housing starts and completions during the year. This was followed by a slump in new residential building construction in the following year, as high borrowing costs and uncertain market conditions caused developers to scale back investment plans. Revenue is set to grow by 1.5% in 2024-25, aided by a slight improvement in new orders for residential building construction and an uptick in average selling prices. Revenue is slated to climb at a compound annual rate of 1.5% to reach £105.1 billion over the five years through 2029-30. Housebuilding activity is set to grow in the medium-term, aided by the release of pent-up demand. Nonetheless, significant uncertainty remains, with mortgage rates likely to settle well-above pre-pandemic levels and supply chains remaining fragile. The new government’s pledge to deliver 1.5 million houses during the first five years of parliament will boost demand for industry contractors, though the full impact of this on growth prospects is dependent on the nature and extent of accompanying funding plans.

Hardware and home improvement stores’ revenue is forecast to rise at a compound annual rate of 1.4% over the five years through 2024 to reach €155.8 billion. Private spending on home renovation and maintenance, construction activity, environmental awareness and the number of households each play their part in determining sales. The EU and the UK enjoyed a housing market boom prior to 2023, when soaring mortgage rates deterred many from buying a new house. While demand for outfitting new houses is down, more Europeans are turning to repair, maintenance and renovation work on their existing properties, helping to raise sales of hardware and home improvement products. This trend accelerated during the COVID-19 pandemic, as people confined to their homes looked to refresh their surroundings and found themselves with more time to dedicate to DIY projects. Hardware and home improvement stores were deemed by many governments as essential businesses, allowing them to remain open during the lockdowns. In 2024, revenue growth is expected to be constrained by the cost-of-living crisis. Shoppers are increasingly price-sensitive and many are thinking twice before spending in response to intense inflationary pressures, cutting sales for many hardware and home improvement stores. Price inflation is expected to outweigh falling sales volumes, leading to revenue growth of 1% in 2024. Over the five years through 2029, hardware and home improvement stores’ revenue is slated to climb at a compound annual rate of 1.5% to reach €168 billion. Ever-growing levels of environmental awareness among Europeans will drive strong demand for sustainably sourced and energy-efficient products, like reclaimed wood and lithium-ion battery-powered hand tools. Competition from online-only retailers will continue to heat up, forcing hardware and home improvement stores to expand their in-store offerings to attract customers – augmented reality stations where shoppers can visualise their new products in their homes are one way retailers can try to do this.

The UK inflation rate was three percent in January 2025, up from 2.5 percent in the previous month, and the fastest rate of inflation since March 2024. Between September 2022 and March 2023, the UK experienced seven months of double-digit inflation, which peaked at 11.1 percent in October 2022. Due to this long period of high inflation, UK consumer prices have increased by over 20 percent in the last three years. As of the most recent month, prices were rising fastest in the communications sector, at 6.1 percent, but were falling in both the furniture and transport sectors, at -0.3 percent and -0.6 percent respectively.
The Cost of Living Crisis High inflation is one of the main factors behind the ongoing Cost of Living Crisis in the UK, which, despite subsiding somewhat in 2024, is still impacting households going into 2025. In December 2024, for example, 56 percent of UK households reported their cost of living was increasing compared with the previous month, up from 45 percent in July, but far lower than at the height of the crisis in 2022. After global energy prices spiraled that year, the UK's energy price cap increased substantially. The cap, which limits what suppliers can charge consumers, reached 3,549 British pounds per year in October 2022, compared with 1,277 pounds a year earlier. Along with soaring food costs, high-energy bills have hit UK households hard, especially lower income ones that spend more of their earnings on housing costs. As a result of these factors, UK households experienced their biggest fall in living standards in decades in 2022/23. Global inflation crisis causes rapid surge in prices The UK's high inflation, and cost of living crisis in 2022 had its origins in the COVID-19 pandemic. Following the initial waves of the virus, global supply chains struggled to meet the renewed demand for goods and services. Food and energy prices, which were already high, increased further in 2022. Russia's invasion of Ukraine in February 2022 brought an end to the era of cheap gas flowing to European markets from Russia. The war also disrupted global food markets, as both Russia and Ukraine are major exporters of cereal crops. As a result of these factors, inflation surged across Europe and in other parts of the world, but typically declined in 2023, and approached more usual levels by 2024.

Hardware and home improvement stores’ revenue is forecast to rise at a compound annual rate of 1.4% over the five years through 2024 to reach €155.8 billion. Private spending on home renovation and maintenance, construction activity, environmental awareness and the number of households each play their part in determining sales. The EU and the UK enjoyed a housing market boom prior to 2023, when soaring mortgage rates deterred many from buying a new house. While demand for outfitting new houses is down, more Europeans are turning to repair, maintenance and renovation work on their existing properties, helping to raise sales of hardware and home improvement products. This trend accelerated during the COVID-19 pandemic, as people confined to their homes looked to refresh their surroundings and found themselves with more time to dedicate to DIY projects. Hardware and home improvement stores were deemed by many governments as essential businesses, allowing them to remain open during the lockdowns. In 2024, revenue growth is expected to be constrained by the cost-of-living crisis. Shoppers are increasingly price-sensitive and many are thinking twice before spending in response to intense inflationary pressures, cutting sales for many hardware and home improvement stores. Price inflation is expected to outweigh falling sales volumes, leading to revenue growth of 1% in 2024. Over the five years through 2029, hardware and home improvement stores’ revenue is slated to climb at a compound annual rate of 1.5% to reach €168 billion. Ever-growing levels of environmental awareness among Europeans will drive strong demand for sustainably sourced and energy-efficient products, like reclaimed wood and lithium-ion battery-powered hand tools. Competition from online-only retailers will continue to heat up, forcing hardware and home improvement stores to expand their in-store offerings to attract customers – augmented reality stations where shoppers can visualise their new products in their homes are one way retailers can try to do this.

Hardware and home improvement stores’ revenue is forecast to rise at a compound annual rate of 1.4% over the five years through 2024 to reach €155.8 billion. Private spending on home renovation and maintenance, construction activity, environmental awareness and the number of households each play their part in determining sales. The EU and the UK enjoyed a housing market boom prior to 2023, when soaring mortgage rates deterred many from buying a new house. While demand for outfitting new houses is down, more Europeans are turning to repair, maintenance and renovation work on their existing properties, helping to raise sales of hardware and home improvement products. This trend accelerated during the COVID-19 pandemic, as people confined to their homes looked to refresh their surroundings and found themselves with more time to dedicate to DIY projects. Hardware and home improvement stores were deemed by many governments as essential businesses, allowing them to remain open during the lockdowns. In 2024, revenue growth is expected to be constrained by the cost-of-living crisis. Shoppers are increasingly price-sensitive and many are thinking twice before spending in response to intense inflationary pressures, cutting sales for many hardware and home improvement stores. Price inflation is expected to outweigh falling sales volumes, leading to revenue growth of 1% in 2024. Over the five years through 2029, hardware and home improvement stores’ revenue is slated to climb at a compound annual rate of 1.5% to reach €168 billion. Ever-growing levels of environmental awareness among Europeans will drive strong demand for sustainably sourced and energy-efficient products, like reclaimed wood and lithium-ion battery-powered hand tools. Competition from online-only retailers will continue to heat up, forcing hardware and home improvement stores to expand their in-store offerings to attract customers – augmented reality stations where shoppers can visualise their new products in their homes are one way retailers can try to do this.

Hardware and home improvement stores’ revenue is forecast to rise at a compound annual rate of 1.4% over the five years through 2024 to reach €155.8 billion. Private spending on home renovation and maintenance, construction activity, environmental awareness and the number of households each play their part in determining sales. The EU and the UK enjoyed a housing market boom prior to 2023, when soaring mortgage rates deterred many from buying a new house. While demand for outfitting new houses is down, more Europeans are turning to repair, maintenance and renovation work on their existing properties, helping to raise sales of hardware and home improvement products. This trend accelerated during the COVID-19 pandemic, as people confined to their homes looked to refresh their surroundings and found themselves with more time to dedicate to DIY projects. Hardware and home improvement stores were deemed by many governments as essential businesses, allowing them to remain open during the lockdowns. In 2024, revenue growth is expected to be constrained by the cost-of-living crisis. Shoppers are increasingly price-sensitive and many are thinking twice before spending in response to intense inflationary pressures, cutting sales for many hardware and home improvement stores. Price inflation is expected to outweigh falling sales volumes, leading to revenue growth of 1% in 2024. Over the five years through 2029, hardware and home improvement stores’ revenue is slated to climb at a compound annual rate of 1.5% to reach €168 billion. Ever-growing levels of environmental awareness among Europeans will drive strong demand for sustainably sourced and energy-efficient products, like reclaimed wood and lithium-ion battery-powered hand tools. Competition from online-only retailers will continue to heat up, forcing hardware and home improvement stores to expand their in-store offerings to attract customers – augmented reality stations where shoppers can visualise their new products in their homes are one way retailers can try to do this.

The average house price in London increased slightly year-on-year as of June 2024, amid a slowdown in the UK housing market. Barking and Dagenham was the most affordable borough to buy a house, with an average price of 340,403 British pounds. Kensington and Chelsea stood at the other end of the spectrum, with an average price of 1.2 million British pounds. Nevertheless, it was also one of the boroughs where prices fell the most. Demand for housing and house prices With vastly more job and cultural opportunities, megacities continue attracting people from all over the world. Since the beginning of the 1980s, the population of London has increased by more than 2 million inhabitants and in the next 20 years, it is forecast to increase by almost 1.5 million. That makes London properties a valuable asset. Historically, property prices in London have risen steadily, albeit minor fluctuations. Residential properties transactions Since 2006, the number of residential property sales has varied between 1.7 million and 0.8 million transactions annually. The housing boom in 2021 led to an increase in home purchases, but the economic uncertainty, stubborn inflation, and dramatically higher interest rates have led to transactions falling.

Hardware and home improvement stores’ revenue is forecast to rise at a compound annual rate of 1.4% over the five years through 2024 to reach €155.8 billion. Private spending on home renovation and maintenance, construction activity, environmental awareness and the number of households each play their part in determining sales. The EU and the UK enjoyed a housing market boom prior to 2023, when soaring mortgage rates deterred many from buying a new house. While demand for outfitting new houses is down, more Europeans are turning to repair, maintenance and renovation work on their existing properties, helping to raise sales of hardware and home improvement products. This trend accelerated during the COVID-19 pandemic, as people confined to their homes looked to refresh their surroundings and found themselves with more time to dedicate to DIY projects. Hardware and home improvement stores were deemed by many governments as essential businesses, allowing them to remain open during the lockdowns. In 2024, revenue growth is expected to be constrained by the cost-of-living crisis. Shoppers are increasingly price-sensitive and many are thinking twice before spending in response to intense inflationary pressures, cutting sales for many hardware and home improvement stores. Price inflation is expected to outweigh falling sales volumes, leading to revenue growth of 1% in 2024. Over the five years through 2029, hardware and home improvement stores’ revenue is slated to climb at a compound annual rate of 1.5% to reach €168 billion. Ever-growing levels of environmental awareness among Europeans will drive strong demand for sustainably sourced and energy-efficient products, like reclaimed wood and lithium-ion battery-powered hand tools. Competition from online-only retailers will continue to heat up, forcing hardware and home improvement stores to expand their in-store offerings to attract customers – augmented reality stations where shoppers can visualise their new products in their homes are one way retailers can try to do this.

The Australian mortgage market was characterized by a sharp slowdown in mortgage balances in 2019 after years of growth – and this trend is expected to continue well into 2020. Property prices this year are expected to decline between 15% and 30% overall as COVID-19 temporarily freezes the market. However, mortgage balance growth to 2024 is expected to be positive overall, with the rebound beginning in 2021 Read More

According to the forecast, house prices in London are expected to fall slightly in 2024, followed by a recovery in the following years. The decline can be explained with the cost of living crisis and the dramatic increase in borrowing costs. As the economy recovers in the next five-years, house prices for mainstream properties are forecast to rise by almost 14 percent. In 2023, the average house price in London ranged between 350,000 British pounds and 1.4 million British pounds, depending on the borough. Barking and Dagenham, Bexley, Newham, and Croydon were some of the most affordable boroughs to buy a house.

The housing market in England cooled in 2022 and 2023, after a record year in 2021. In 2023, the number of housing transactions reached approximately 858,000, which was the lowest figure since 2012 when the market was still recovering from the global financial crisis. Some of the main factors that have led to the decline in home buying are the cost of living crisis, higher mortgage rates, low inventory, and the rapid increase in house prices across the UK.