The UK housing market has always been a barometer of the nation’s economic health, and its fluctuations often reflect the complex interplay of economic policy, societal sentiment, and global forces. Recently, Savills, one of the country’s leading property advisors, issued revised projections for the market, and their updated expectations tell a nuanced story, one of near-term caution, but longer-term resilience.

The most headline-grabbing change from Savills comes in its outlook for 2025. The firm has downgraded its expectation for market growth from 4.0% to just 1.0%. This revision, while not entirely surprising given the enduring economic and geopolitical turbulence, serves as a sobering recalibration of market optimism. Savills, in its commentary, cited ongoing economic instability and uncertain geopolitical conditions as primary drivers behind its more modest short-term outlook. These concerns include persistent inflationary pressures, subdued wage growth, and the unpredictable ripples from international events that have made forecasting more challenging. As a result, the exuberance that once surrounded the prospect of a robust rebound in 2025 has been tempered by a more pragmatic perspective.

Yet, within this measured outlook, there is a clear note of optimism for those willing to look further afield. Savills has simultaneously upgraded its five-year house price projection, anticipating a cumulative rise of 24.5% by 2029, compared to its earlier estimate of 23.4%. Far from a tale of decline, this adjustment suggests that despite the present headwinds, the underlying fundamentals of the UK housing market remain robust. By the end of 2029, the average house price is now anticipated to reach £448,600, a figure that underscores the sector’s capacity for long-term appreciation, even amid short-term volatility.

This complex duality in outlook has been shaped in large part by expectations surrounding the Bank of England’s monetary policy. The next meeting of the Bank’s Monetary Policy Committee (MPC) is scheduled for 7 August, and all eyes are on whether the committee will move to cut the standard base interest rate. With inflation still running higher than the Bank’s target, many analysts have nonetheless suggested that a rate cut is not off the table. The current base rate sits at 4.25%, but recent actions by mortgage lenders reveal a market already anticipating, or at least hoping for, further reductions. Lenders, keen to remain competitive and capture market share, have preemptively lowered their mortgage rates to levels near or even below the Bank’s base rate, with some deals now available at rates under 4.0%.

This anticipation has had meaningful effects on the market’s momentum. Homebuyers and homeowners looking to remortgage have found themselves with more favorable borrowing conditions than might have been expected if rates had remained sticky. The competitive environment among lenders has created a window of opportunity, with lower than expected rates supporting demand, even as the overall economic picture remains mixed.

For many forecasters, the coming autumn is expected to mark a turning point in the market. There is widespread belief that purchases will pick up in the latter months of the year, potentially exceeding earlier expectations should the MPC opt for one or two more rate cuts before the close of 2025. Such monetary easing would further reduce the cost of borrowing, providing a crucial boost to affordability and market activity. Even absent immediate action from the MPC, the confidence among lenders has already begun to shape consumer behavior, with many buyers feeling emboldened by the prospect of lower monthly payments and a more accessible market.

It is important, however, to recognize that these shifts are playing out against a backdrop of ongoing uncertainty. The housing market remains highly sensitive to changes in consumer confidence, employment trends, and external shocks. Nevertheless, the upward revision in Savills’ long-term projection reflects a broader consensus that the UK’s housing fundamentals such as chronic undersupply, demographic pressures, and the enduring appeal of homeownership, will continue to support price growth over the medium to long term.

While 2025 may not bring the surging growth once hoped for, the horizon beyond is far from bleak. Savills’ nuanced forecast captures the complexity of today’s market, acknowledging immediate challenges while reaffirming faith in the sector’s resilience. For buyers, sellers, and industry watchers alike, the message is clear: patience, adaptability, and a long view are likely to be rewarded as the UK housing market navigates its latest chapter of change.