Lender forecasts buyer demand and market confidence to push UK house prices further up
The average house price in the UK may exceed £300,000 this year, driven by renewed buyer demand and improved market sentiment, according to the latest forecast from West One Loans.
The specialist lender suggests that stronger demand could enable developers to unlock equity from existing projects faster and start new developments, potentially boosting the supply of new homes. Its analysis of UK house price trends—based on seasonally adjusted government data—indicates steady market growth.
After a period of greater stability in 2024, the Bank of England reported that monthly mortgage approvals have consistently surpassed 60,000 since February last year. As a result, the average UK house price was 3.3% higher in November 2024 compared to the previous year.
Industry experts anticipate further price increases in 2025. The Office for Budget Responsibility (OBR) projects a modest 1.1% rise, while leading agencies such as Savills, JLL, Chestertons, and Hamptons forecast growth of 3% to 4%. The Centre for Economics and Business Research (CEBR) predicts a 4.1% increase. Property listing website Zoopla has predicted a more modest 2.5% house price growth this year.
West One’s projections align closely with the more optimistic forecasts, estimating average house price growth between 3.5% and 3.9% this year. Should the upper estimate materialise, the average UK house price would reach £303,913, surpassing the £300,000 milestone.
For developers, an accelerating market presents both opportunities and challenges, according to the lender. Rising buyer demand may help developers sell existing stock more quickly, releasing equity to fund new projects. In recent years, the higher price premiums of new-build homes, combined with affordability pressures from elevated mortgage rates, slowed sales.
However, with market activity gaining momentum, completed developments are expected to sell faster. This could allow developers to move forward with new projects, although increased competition for opportunities is likely.
The need for rapid financing solutions remains crucial, West One pointed out. Short-term lending products, such as bridging loans, are becoming more popular among developers seeking to move swiftly on new investments or speed up renovation work. The lender has reported a notable increase in short-term lending activity so far in 2025, as developers aim to capitalise on improved market conditions.
“The outlook for the year ahead is that the market will continue to improve from the ground made in 2024,” Thomas Cantor (pictured), co-head of short-term finance at West One Loans. “We’ve already seen a strong start to the year from those looking to utilise specialist lenders in order to capitalise on the growing opportunities that are emerging due to current market momentum.
“Many of those now utilising specialist lending are clients who have been dormant for the last couple of years, and this inactivity has largely been down to the slower pace of the new-build market.
“However, this tide is certainly starting to turn and, with the expectation of a more buoyant market over the next 12 months, we’re now seeing these clients turn their focus to their next project and look to specialist lending to help get the ball rolling.”
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