UK house prices are expected to rise steadily over the next few years, beating inflation. But for renters – you might be facing some steep rent increases. And what does this all mean for first-time buyers trying to get a foot on the property ladder?

Here’s the summary, from a survey of experts by Reuters:

Prices Up, Up, and Away (But Not Too Much to Worry About)

Experts predict house prices will increase by 2.5% this year, followed by a 3% rise in 2025, and a slightly bigger jump of 4% in 2026. While this might sound daunting, it’s worth remembering that experts also predict inflation to be much lower, at 2.3% next year and 2.0% in 2026.

Good News for First-Time Buyers (Yes, Really!)

Think getting on the property ladder is a distant dream? Think again! Despite rising house prices, experts believe that it will actually become easier for first-time buyers to get a mortgage in the coming years.

Why? Because the Bank of England is expected to lower interest rates, meaning cheaper mortgages. Right now, the Bank Rate is 5%, but experts predict it could fall to 3.75% by the end of 2025.

Cheaper Mortgages = More Affordable Homes

Lower interest rates are like a breath of fresh air for first-time buyers. Plus, wages are expected to increase, making those mortgage payments even more manageable.

Renters Facing Squeeze

Renters, however, might not be so happy. The survey predicts rents will rise by 6% in the next year. This is mainly due to a shortage of rental properties, as many landlords are leaving the market because of new regulations.

What About London?

London, as always, is a bit of a special case. Prices in the capital are expected to rise by 1.8% this year, 3.2% in 2025, and 3.5% in 2026. This might seem small compared to previous years, but it’s still a reminder that London property remains in high demand.

Help is on the Horizon?

Labour leader Keir Starmer has promised to make it easier for people to rent, with plans for a Renters’ Rights Bill to protect tenants from unfair evictions and discrimination. He has also pledged to build 1.5 million affordable homes if he becomes Prime Minister.

The Bottom Line

It’s not all plain sailing, but there are reasons to be cheerful for both homeowners and aspiring buyers. House prices are rising, but not at an alarming rate. And with interest rates predicted to fall, mortgages should become more affordable, making it easier for first-time buyers to finally achieve their dream of owning a home.