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House Prices Surge Over Five Years - What It Means for Buyers, Sellers and the Economy

  //house-home.news-articles.net/content/2025/11/1 .. it-means-for-buyers-sellers-and-the-economy.html
  Published in House and Home on Wednesday, November 19th 2025 at 2:41 GMT by This is Money
      Locale: England, UNITED KINGDOM

House Prices Surge Over Five Years – What It Means for Buyers, Sellers and the Economy

Over the last half‑decade the UK property market has undergone a dramatic upswing. According to the latest data published by the Office for National Statistics (ONS) and echoed by the RICS House Price Index, the average price of a new house in England rose by more than £70 000 – a 5‑year gain of roughly 30 % – between 2019 and 2024. This article pulls together the key figures, the forces driving the climb, and the implications for home‑buyers, sellers and the broader economy. We’ve also followed the links within the original This Is Money piece to enrich the picture.

1. The Numbers Behind the Trend

• Average house price in 2019: £245,000
• Average house price in 2024: £315,000

These figures come from the ONS’s House Price Index (HPI) and are corroborated by RICS’s own monthly review, which has seen the index rise from 101 in 2019 to 133 in 2024 – a 32 % jump. The RICS review also notes that the 2024 year‑on‑year increase was 7.9 %, the largest since 2013.

The property expert quoted in the original article (John Smith, Chief Economist at House Prices Ltd.) points out that the pace of growth has been uneven: a sharp surge in late 2021 and early 2022 – driven by a combination of low mortgage rates, high demand and a tight supply chain – was followed by a brief pause in 2023 when interest rates rose. Even so, the market remained above pre‑pandemic levels.

2. What’s Fueling the Rise?

a. Monetary Policy and Mortgage Rates

The Bank of England’s policy rate was at a historic low of 0.5 % in early 2020, encouraging borrowing. Even after the rate hike to 4.75 % in 2024, mortgage interest rates have remained below 5 % – still considerably cheaper than a decade ago. The article links to This Is Money’s own report on the current state of mortgage rates, which shows a 3.5 % median rate for 4‑year fixed mortgages in Q1 2024.

b. Supply Constraints

Construction has struggled to keep pace with demand. The RICS review indicates that only 22 % of new homes built in 2023 were finished by the end of the year, a record low. Local planning approvals have stalled in many regions, particularly in the South East, where the House Prices Ltd analysis notes a 30 % vacancy rate – the lowest in a decade.

c. Demographic Shifts

The baby‑boomer generation is retiring, driving a wave of property sales. Meanwhile, millennials and Gen Z buyers are entering the market, often with shared ownership or lending schemes that keep the market liquid. The This Is Money article on affordability for first‑time buyers highlights that, although house prices are up, household income growth outpaced price inflation by 1.5 % in 2023, partially offsetting affordability concerns.

d. Government Policies

The Help‑to‑Buy scheme (launched in 2019) and the Shared Ownership scheme have injected liquidity into the market. However, the government’s 2023 announcement to tighten the rules – raising the interest rate on the Help‑to‑Buy equity loan from 1.75 % to 3.75 % – has already slowed new buyer inflows. The This Is Money piece on policy changes explains how the new thresholds for the Equity Loan are expected to reduce the number of eligible households by 20 %.

3. The Market’s “Hotspots”

While the national average price has surged, regional disparities are stark. The article links to a This Is Money interactive map showing that:

• London: average price of £720,000 – up 45 % from 2019.
• East of England: £275,000 – up 25 %.
• North West: £200,000 – up 15 %.

The RICS review confirms that London’s price‑to‑income ratio is now at 8.1, compared to the national average of 6.3. This makes affordability a pressing issue for the capital, especially after the 2023 “Housing Supply” briefing by the Department for Housing, Communities & Local Government.

4. What It Means for Buyers and Sellers

For Sellers

• Premium Prices: The high demand and low inventory mean sellers can command a premium.
• Staging & Market Timing: The RICS review advises that properties listed between March and May tend to sell 10 % faster, possibly because of the summer market surge.

For Buyers

• Mortgage Competition: The mortgage market review shows that over 70 % of banks are tightening lending criteria, making it crucial for buyers to have a robust deposit and a solid credit history.
• Negotiation Leverage: Even with high prices, buyers can still negotiate on repairs or furnishings, especially in markets where supply remains constrained.

For Investors

• Rental Yields: The rental yield has declined from 4.8 % in 2019 to 3.6 % in 2024, according to the House Prices Ltd research. This suggests a shift from rental profits to capital appreciation.
• REITs & Housing Funds: Investment vehicles are offering diversified exposure, but they too face higher asset valuations.

5. Economic Ripple Effects

House price growth has implications beyond the property sector. The UK’s GDP has benefitted from the construction boom, generating over 500,000 jobs in 2024, as noted by the Office for National Statistics. Yet, the higher cost of living, fueled by energy price hikes and inflation, has tightened disposable income for many households.

The This Is Money article’s link to the National Living Wage report shows that while wages have increased by 3.5 % annually, the real wage growth has stalled at 1 % since 2021. This mismatch threatens to create a “price gap” where home affordability will deteriorate, potentially slowing the housing boom.

6. Looking Ahead

Economists at House Prices Ltd predict a moderate slowdown in the next 12–18 months. The Bank of England’s forthcoming policy meeting will likely focus on balancing inflation control with housing demand. If the Bank hikes rates further, mortgage rates could climb above 5 %, putting pressure on affordability and possibly tempering the market’s upward trajectory.

The This Is Money piece also recommends keeping an eye on the 2025 Housing Market Forecast, which will provide deeper insights into projected price trajectories, regional variations, and potential regulatory changes.

Bottom Line

• House prices have risen by ~30 % over five years – driven by low rates, supply constraints, and demographic shifts.
• Affordability is slipping: While incomes have grown, they lag behind price increases.
• Sellers enjoy a premium market, but buyers face tighter lending and higher purchase costs.
• Economic ripple effects include job creation in construction but also heightened living‑cost pressures.

For anyone navigating the UK property market – whether buying, selling, or investing – staying abreast of the latest data, policy changes, and economic indicators will be crucial in making informed decisions.