Two separate reports predict both house price and rent inflation will continue to grow in 2025.

House Price Inflation

The latest Zoopla Housing Index report finds that the housing market has been very resilient and returned to growth in 2024 supported by rising incomes and lower mortgage rates. Yorkshire and Humberside annual house price inflation was 2.1% beating the national average of 1.5%.

The key findings of the report are as follows:

  • Housing market returns to growth in 2024, supported by rising incomes and lower mortgage rates
  • All regions and countries recording positive year-on-year growth, with the UK average at +1.5%, up from -1.2% a year ago
  • Housing market has now largely adjusted to higher borrowing costs
  • UK house prices are projected to rise by 2.5% in 2025.
  • More buyers will pay higher stamp duty in England and Northern Ireland, which will act as a drag on price inflation
  • Mortgage rates are unlikely to change over 2025 but it is expected that lenders will innovate affordability assessments, supporting demand

The authors of the report forecast that house prices and sales volumes will edge higher over 2025 despite uncertainty of the impact of the Budget and whether mortgage rates will fall in 2025. House price inflation for the UK in 2025 is predicted to be 2.5%.

Rent Inflation

A recent report from the Royal Institution of Chartered Surveyors (RICS) states that the supply of rented properties is weakest since 2021 and consequently rents are continuing to rising.

The quarterly RICS report tracks the difference between surveyors reporting an expansion and falls in landlords making properties available for rent. There is currently a mismatch between low supply and high demand with a net balance of 33 per cent of surveyors expecting rental prices to rise over the next quarter, indicating strong growth in rents.

In 2024 annual rent growth peaked at 9.2 per cent in March which is the highest rate of growth since records began in 2015. It eased slightly to 8.4 per cent in September, according to separate official figures published last month.

Rental price growth has been fuelled by increased demand as more households turned to the rental market against a background of increasingly costly mortgages. The report also states that despite increases in rents, landlords are facing higher interest rates and costs, squeezing their profits.