House and rent prices in the UK set to soar by 2025

According to the Association of Residential Letting Agents (ARLA) and the National Association of Estate Agents (NAEA), house prices in the UK are set to soar by 50% and rental prices by over 25% by 2025. The report also mentions that buying a house will become increasingly difficult, as the average house price is expected to reach £419,000. The same is set to happen in the rental market, with rents predicted to increase by 27% from £134 per week to £171 by 2025. Currently, 62% of the working population own their own property, however, this is expected to fall to 55% by 2025. The report calls for the government to create policies and schemes to help with what it calls 'a broken housing market'. 

House prices in the UK are set to soar by 50% and rental prices by over a quarter by 20025, according to an outlook report from two key real estate organisations.

At the same time the number of households renting is set to rise by 9% while home ownership will fall by 7%, says the analysis from the Association of Residential Letting Agents (ARLA) and the National Association of Estate Agents (NAEA).

Other predictions for the next decade included in the report are that buying a house will continue to get further out of reach for many and drastic action is needed to fix what it calls ‘a broken housing market’.

With the average house price currently around £280,000, the ARLA and NAEA Housing 2025 report, compiled with CEBR, predicts house prices will reach an average price of £419,000. It’s even worse news for those living in London where house prices are expected to nearly double in the next decade, rising from £515,000 to £931,000.



For those planning to enter the rental market in the next few years, rents are predicted to increase by 27% from a current UK average of £134 per week to £171 in 2025. Again, those living in London will be worse off as they’ll need to pay 34% extra in rent per week by 2025, an increase from the current average of £234, up to £314.



Lower home ownership rates amongst the working age population and the ageing of the baby boom generation will continue to drive a decline in the proportion of UK households that own their own home, the report also suggest. Currently around 62% of the working population owns their own home and that could fall to 55% in the next decade.

The report says that a declining home ownership rate will boost demand for rental properties, and drive house prices up. The Housing 2025 report also predicts the proportion of private renters in the UK will increase from 20% of households in 2015, to nearly 29% by 2025.



‘Buying and renting a home is a giant step, and is out of reach for many. Rent costs are already growing at a rate that people are struggling to keep up with, and they’re due to become even less sustainable over the next decade, particularly when the new landlord tax sets in, which will put off many would be landlords from entering the market,’ said David Cox, ARLA managing director.

‘If we’re to see the property market lifted out of its current state, we need to help the rental market from top down as well as bottom up, ensuring landlords are not penalised for their choice of income, and they can in turn give tenants the best possible price and service they deserve,’ he added.



According to Mark Hayward, NAEA managing director, ongoing house price inflation, combined with low wage inflation, tighter lending restrictions and a shortage of affordable housing, means owning a home will continue to be distant dream for many.

‘Increased rental costs will also make it more difficult for current renters to save for a house deposit; as much of their income will be eaten up in rent,’ he explained.



In order to prevent continued supply shortages and make house prices and rental costs more affordable for the UK’s expanding population, a drastic and immediate policy overhaul is necessary, the report says.

Suggestions include the Government making a scheme similar to the London Rental Standard mandatory across the country, to create a way of distinguishing letting agents and landlords who maintain their properties to a high standards, thereby improving the condition of private rental properties coming onto the market.

It also suggests that the Government should continue its effort to revisit the idea of reducing the area of the Green Belt and set up a committee which would explore this possibility in detail.

Another way forward would be giving a wider scope of powers to the Private Rented Sector Taskforce and providing Government debt guarantees would encourage large scale institutional investment into the private rental sector, creating more available properties and helping to bring rental costs down.

Other suggestions include putting construction sector jobs, such as brick layers, on to the shortage occupation list, making it simpler for employers to hire non-European Union nationals and in the longer term, the Government should incentivise firms in the construction sector, to offer more apprenticeships and training programmes.

It also calls for the creation of an advisory body in the form of an independent housing policy committee, which is not directly elected and offering a stamp duty exception to pensioners looking to downsize their property.



Since the General Election, the government has pledged to solve the acute problems facing the property industry, aiming to build one million new homes before the end of this Parliament in 2020. But words simply aren’t enough,’ the report says.

‘The housing crisis Britain is facing is deep-rooted and if it is to be solved, it will require finance, suitable land, time, new skills and most importantly, the appropriate national regulation of the key stakeholders, not least the estate agents and letting agents that form our membership. We are calling for change and it needs to happen soon,’ it adds.

