House price growth expectations have been reduced for this year amid wider global uncertainties, according to a forecast.

But the potential for house price growth over the next five years has been upgraded, due to a more relaxed approach to mortgage affordability tests, according to the predictions from property firm Savills.

It expects to see house prices across Britain rise by 1.0% on average across this year and by 24.5% over the next five years.

Previously, it had forecast house prices to increase by 4.0% this year, with a 23.4% rise over the next five years.

Recent economic and geopolitical uncertainty has contributed to a weaker first half of 2025 than previously anticipated, Savills said.

It said market activity in 2025 had also been complicated by how buyers reacted to stamp duty changes, with a surge in activity early in the year as buyers rushed to beat the deadline. Stamp duty applies in England and Northern Ireland.

However, many mortgage lenders have recently made changes which potentially allow people to borrow more. Savills said the more relaxed approach to mortgage affordability tests should support both house prices and the number of house sales.

Based on its new forecast, it expects the average house price to increase £86,300 by 2029.

It is forecasting an average house price of £448,600 by the end of 2029, up from an average of £362,300 by mid-year in 2025.

Lucian Cook, head of residential research at Savills, said: “Interest rates have fallen as expected, giving buyers a bit more financial capacity than they had a year ago.

“But a lot has changed over the last six months. Greater geopolitical uncertainty – including tariffs and trade wars – has made predicting the precise path of further cuts more challenging.”

Savills said it expects concerns over the prospect of future tax increases to weigh most heavily on the top end of the market.

Mr Cook continued: “Recent easing of mortgage regulations, including more flexibility on affordability stress tests and higher allowances for loans above 4.5 times income, is likely to boost transaction volumes, particularly by helping more first-time buyers get on the ladder.”

House sales across 2025 are projected to reach 1.04 million by the year end, in line with previous forecasts. While elevated supply levels may temper price growth, Savills said that it maintains a positive outlook for 2025 overall despite the slow start.

Emily Williams, director of research at Savills, said: “We anticipate that buyer demand will pick up heading into early autumn, particularly among first-time buyers and mortgaged home movers, driven by an expected base rate cut in August and a more competitive mortgage market.”

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Land Registry and Nationwide Building Society data was used for part of the research.

Here is the revised house price forecast from Savills for growth over the five-year period between 2025 and 2029:

North West, 31.2%

Scotland, 29.4%

Wales, 28.2%

Yorkshire and the Humber, 28.2%

West Midlands, 27.6%

North East, 26.4%

South East, 20.4%

South West, 20.4%

East Midlands, 20.3%

East of England, 19.2%

London, 15.3%.