Will increasing UK house prices impact housebuilding?

Since Labour were elected into power in July 2024, they have held firm their target to build 1.5 million new homes before the next general election in 2029.

But, how has the higher cost of houses impacted house building in the UK? With the average price of properties continuing to climb, will the number of new houses being built decline?

Find out in this guide from the experts at ABC+ Warranty.

How have UK house prices increased?

Since 2000, house prices in the UK have increased by 232%, from £80,365 to £267,200. And, according to data collected by Savills, house prices are only increasing from here on, with prices expected to climb by £84,000 – on average – by 2029.

In the last 10 years alone, house prices have boomed. In 2015, the average price of a UK home was £193,900, and prices have steadily increased since then, with only a slight dip of £8000 from 2022 to 2023.

Are UK house prices expected to keep increasing?

While house prices have steadily and continually climbed over the past 10 years, they are expected to keep going, with the average house price in the UK predicted to breach £300,000 in 2025.

According to Property Wire, house prices are estimated to increase by 3.5% to 3.9% by the end of 2025, taking the average price of a UK home up to £303,913 – the first time in history that prices have broken past £300,000.

How do increasing house prices impact UK housebuilding?

Despite the rise in property prices throughout the UK, there is still a high demand for new housing, with the market busy.

According to the Property & Homemover Report from TwentyCi, 2024 saw a 17% increase from 2023 for property sales, indicating that there is huge demand for houses despite increasing costs.

In total, 1.24 million property sales were agreed in 2024. The available stock in all price bands increased, so there is a clear improvement in availability on the market, with 605,000 available properties by the end of 2024.

In terms of mortgage approvals, 2024 saw an enormous improvement from 2023, with 30.8% more approvals granted. The 577,173 approvals in 2023 – the lowest figure since 2010 – were eclipsed by 754,983 in 2024 – the highest since the post-COVID boom of 2021.

London mortgage brokers, Alexander Hall, have estimated that there could be a 13.4% increase in the next 12 months, which would mean more than 850,000 mortgage approvals in 2025.

Based on the above figures, it’s clear that housebuilders face an interesting and opportunistic couple of years in the UK.

As long as property developers can remain agile enough to move at the same pace as the market demands, they should be able to capitalise on the high demand to see an interesting return on their investments.

With Labour pushing for more homes to be built across the country and the expected rise in house prices, property developers would be wise to act now to ensure they can benefit from the industry’s latest boom.

Housing market news and trends at ABC+ Warranty

The outlook for the year ahead (and beyond) is promising for the housing sector, with thousands more homes set to be built and mortgage application approvals to increase again.

The momentum in the property market at the moment, in early 2025, would suggest it’s a prime time for property developers to get on board and start building now.

While some new-build stock has been difficult to move, leaving some doubt amongst developers, things are starting to improve with more sold on.

At ABC+ Warranty, we like to stay up-to-date with the latest news and trends in the UK property construction industry. If you’re also interested, you can read our news articles and blogs to stay in the loop.

If you’re looking to purchase or build a property, check out our building warranties.

Do you have any questions? If so, you can contact us by calling 0161 928 8804.