First-time home buyers in the UK can anticipate improved affordability. Home prices are expected to grow more slowly than previously forecasted, particularly in London.
Government policy uncertainties are balancing out benefits from lower borrowing costs, according to property analysts.
High Confidence in Affordability
A survey from September 3 to 15, 2025, showed 92% of experts believe purchasing power will improve for those entering the housing market. This optimism reflects economic changes favoring aspiring homeowners.
Wages and Mortgage Shifts
Strong wage growth is reducing affordability barriers. Improved mortgage options are sparking interest among buyers. Marc Von Grundherr of Benham and Reeves said,
“Rising wages are closing the affordability gap, and better mortgage terms are encouraging hesitant buyers to act.”
Interest Rate Cuts
Since mid-2024, the Bank of England has cut its Bank Rate by 125 basis points. Another reduction is expected next quarter. Yet, borrowing costs remain above pandemic lows, adding some caution.
Budget and Job Market Concerns
Finance Minister Rachel Reeves faces a £20 billion ($27.3 billion) budget shortfall in November. Potential tax hikes could limit buyers’ funds. A softening job market also raises concerns for affordability.
Updated Price Projections
Eighteen property experts predict UK home prices will rise 2.6% in 2025, and 3.1% in 2026 and 2027. These are lower than May’s forecasts of 3.5%, 4.0%, and 3.5%, respectively.
London’s Slower Growth
In London, prices are expected to increase by 1.9% in 2025, 2.7% in 2026, and 3.8% in 2027, down from May’s estimates of 3.0%, 4.0%, and 3.8%.
Russell Quirk of eMoov noted,
“London’s high-end market is under pressure as policies deter wealthy investors, impacting property values.”
Tax Policy Outlook
Reeves has pledged not to raise taxes on working people, likely targeting wealthier groups instead. This could further influence market trends.
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