The housing market has faced multiple headwinds over the decades, but UK house prices have remained resilient with outstanding long-term growth.
UK house prices often make the headlines in the mainstream media, with various indices being released each month to show the small shifts in property values across the country, sparking debate on which direction they will continue to travel in.
These short-term gains and losses are affected by multiple factors, including the method by which the data is collected; lenders’ indices are based on mortgaged property figures, research from property portals looks at asking prices, while the Office for National Statistics (ONS) offers a time-lagged view of sold prices.
For anyone entering the UK housing market, particularly as a property investor, keeping an eye on longer-term trends and patterns can help to paint a more accurate picture of the potential capital appreciation that can be achieved within the sector. This can vary from location to location, and between various property types within each area, to help you hone in on the best investment target.
A report from Savills has gone back 25 years, in light of hitting the quarter-century point this year, to look at the true scope of change actoss UK house prices. Of course, the whole economy has also shifted over this time period, from wage growth to the cost of living and borrowing, all of which have an effect on the property market.
UK house prices over time
As we entered the year 2000, average UK house prices were £88,466, says Savills, and they were rapidly accelerating with 13% average annual growth. By 2007, the average UK property cost £190,032, representing a huge 242.8% increase since 12 years prior.
Within this timeframe, price growth peaked in January 2003 at 24.8% on an annual basis. At the other end of the scale, the financial crisis followed by much stricter mortgage lending saw UK house prices fall 21% in the year to February 2009.
While the credit crunch of 2008 affected the market the most, many other factors along the way have either driven transactions and prices, or caused them to slow. These include Covid – which caused a slowdown followed by rapid acceleration – as well as the Tory mini-Budget in October 2022 which stalled growth after interest rates climbed.
But overall, by 2025 UK house prices have risen by a huge 257% since 2020, says Savills. When adjusted to account for inflation, the increase calculates as 92%.
Targeting areas with the fastest growth
Across the country, each area has seen varying levels of acceleration over time. While average UK house prices on the whole have increased considerably, some areas outperformed historically, while recent years have seen new locations take the lead.
When investing in property, one of the best strategies is often to find a location that is experiencing the highest level of growth now, particularly when prospects are set to improve due to planned projects or for wider economic reasons, such as general affordability and market confidence.
Historically, London has seen the fastest rate of growth when it comes to UK house prices. Savills’ research reveals that values in the capital have surged by a huge 347% in the past 25 years (not adjusted for inflation), and this has presented buyers with “a more exaggerated set of circumstances”.
The best performing place in London has been the north-east area of Walthamstow, where prices have risen by a staggering 652% since 2000 – rising from £84,700 to £553,018. Buyers and investors who targeted this location two and a half decades ago and who still own the same property are likely to have seen the highest capital appreciation in the country.
In more recent years, though, house price growth in the capital has slowed significantly compared to other parts of the country. As Savills notes, the rise of “aspirational living” has led to the likes of Bristol, Bath, York and Manchester outperforming the rest of the UK.
Now, it is the north of England that continually outshines the south, led by cities including Manchester, Liverpool, Leeds and Sheffield. Manchester has regularly topped Zoopla’s list of top 20 UK cities, while the North East and the North West are ranked ahead of the rest when it comes to recent property market performance, as well as future predictions of UK house prices.
If you’re a property investor looking to get ahead of the market to achieve long-term capital appreciation, get in touch with BuyAssociation today to speak with one of our consultants about our current and upcoming opportunities in some of the UK’s top locations.
