House prices in central London are set to decline by the end of 2024, followed by a modest rise until 2028. That’s the view of Statista, which recently published its forecast for prime residential property in the English capital. During the five-year period between 2024 and 2028, Statista believes property values will rise 16.4%.
How much will an average UK home be worth in 2028?
Statista also published its forecasts for average house price growth nationwide, with the UK’s housing stock expected to see its value fall 3% by the end of this year. However, there is a feeling that 2025 will represent the start of a four-year-long rebound in property values.
In 2025, Statista believes the average UK house will rise 3% in value, erasing the losses incurred through 2024. They will then rise further still by 4% in 2026, 4.5% in 2027, followed by an additional 5% in 2028.
The new Labour government is working hard to get housebuilding moving again. It recently announced a new £3bn housebuilding scheme, with banks and lenders benefitting from government guarantees, giving them the confidence to lend more readily to SME housebuilders and those in the Build-to-Rent sector.
Labour hopes that this latest package will help to underpin its medium-term ambition to build at least 1.5 million new homes in the next five years. This averages at 300,000 homes per year. This tallies with the goal of the previous Conservative government, although just 234,400 new homes were constructed in 2022-23, according to Full Fact.
There has long been a considerable lack of housing stock in the capital, which makes it no surprise that buyers greatly outnumber sellers in the property market. Sellers may prefer to sit on their hands and wait to sell later in the decade, while some may find the costs of selling their properties prohibitive in moving on. With estate agent fees ranging from 1.5%-3.5% per sale, this can be as much as £35,000 on a property worth £1 million. That’s why “we buy any house” services prove popular, as there’s no need to pay for these expenses when selling to cash buyers.
Are interest rates still weighing heavily on demand?
Slower-than-expected cuts to the Bank of England’s base rate of interest could also constrain London’s housing market for another two years. According to the latest swap rates, the UK is now expected to reach its so-called ‘neutral’ rate in 2027, so some first-time buyers may prefer to sit on their hands and wait until rates settle.
The scrapping of the Help to Buy scheme may also be deterring some first-time buyers too. With no plans to introduce a replacement scheme for the Help to Buy equity loan, it’s harder for people to save for their deposits. However, Lifetime ISAs remain a viable alternative, allowing people to save a maximum of £4,000 every tax year and receive a 25% bonus from the government, up to £1,000.
The growing surcharge on second home sales is another elephant in the room which could dampen demand from mortgaged buy-to-let investors too.