British House Prices Forecast for 2025

LONDON (Reuters) – British house prices are expected to increase next year as borrowing costs and affordability constraints ease, despite a rise in home purchase taxes that will take effect from April, mortgage lender Nationwide said on Monday.

Prices are expected to rise by 2% to 4% in 2025, Nationwide reported.

"Providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth," said Robert Gardner, Nationwide's chief economist.

"Upcoming changes to stamp duty are likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax."

From April, first-time homebuyers in England will pay stamp duty on properties costing 300,000 pounds ($379,320), rather than 425,000 pounds. Other buyers will have to pay tax starting from 125,000 pounds. A tax surcharge for second homes will also increase by two percentage points to 5%.

Nationwide noted that the changes may lead to a surge in transactions during the January-March period, with a corresponding weakness in the following three to six months.

($1 = 0.7909 pounds)