House price forecasting in the period 1995 to 2005 would have been a lot more fun than it is today. In that period the average house price rose by 207% according to the Nationwide, at an average of 11.9% per annum. Even after adjusting for underlying inflation, annualised real price growth ran at 10.2%.

Getting real: Inflation-adjusted house price growth

In contrast over the past 20 years, inflation adjusted house prices have seen very little net movement at all. While the average UK house price in September 2025 was 74% above where it was in September 2005 according to the Nationwide, in real terms it was -2% below.

Of course, forecasting has still carried its fair share of excitement in the past two decades. The significant swing in housing market conditions between 2005 and 2009, caused by a wild fluctuation in the availability of mortgage credit, certainly got the pulse racing. And more latterly, the post-lockdown mini housing market boom, brought to an abrupt end by a sharp rise in inflation and interest rates, also elevated the heart rate.

The general absence of sustained real house price growth over the past 20 years is largely a function of the maturity of the UK housing market and the application of mortgage regulation. Together, they appear to have put a ceiling on house-price-to-household-income ratios at a national level.

Five-year horizons

These factors have also contributed to the fact that, since 2013, five-year nominal house price growth has not fluctuated nearly as dramatically as in the past. Over this period, five-year growth has averaged just over 21%, varying between 11% in June 2020 and 30% in both June 2018 and September 2022.

On an inflation-adjusted basis, five-year growth reached just over 20% in 2018 and has dropped below zero in the last three years. Indeed, since the pandemic, inflation has played a crucial part in the housing market, first tempering the impact of the burst of price growth once the market reopened and, secondly, insulating the market from larger nominal house price falls as inflation spiked and interest rates rose.

But, there is little doubt that these new norms have meant our UK five-year forecasts have been much more consistent (some might say boring) of late.

What will the future hold?

Our latest forecasts for 22.2% growth over the five years to 2030 sit close to this average from the last twelve years, even though we have seen a loosening of the application of mortgage regulation and should see the continuation of cuts to interest rates. In truth, only a significant unforeseen source of market disruption would change this position.

Still, we think the factors above, combined with an improvement in the UK economy, mean there is capacity for positive real house price growth after 2026, not least because prices will be coming off a low base. A continued undersupply of new homes will also maintain upwards pressure on real prices—something which we don’t anticipate changing significantly in the next five years, whatever the government’s lofty ambitions.

Incomes and outcomes

It is also instructive to consider house prices in relation to household incomes. Higher interest rates have left buyers feeling more stretched, but beneath this affordability equation, household incomes have been rising faster than house prices in recent years.

Against house price growth of just 0.1% in the three years to September 2025, the average household income has risen by 16.8% and the average earnings by 18.0%, according to Oxford Economics. Even when accounting for the post-pandemic boom in house prices, earnings and incomes have risen more than house prices in the last decade. This should give some capacity for house prices to rise in excess of income growth over the next five years.

Mortgage regulation can, of course, limit the ability of house prices to grow more quickly than incomes. Where the loan-to-income (LTI) ratio at which banks can lend is limited, house prices can only increase if incomes grow or if deposits get larger. But with these regulatory constraints being loosened this year, allowing more buyers to take on mortgages at higher LTI ratios, again there is capacity for house prices to rise in excess of income growth for a period of time at least.

These factors give us confidence that the medium-term outlook for house prices is relatively bright, at least in line with the recent historic trend, despite the short-term headwinds the market is currently facing.

And while recent historic patterns might mean that some of the mystery of arriving at a five-year UK forecast number has been lost in recent years, there is at least still some magic in predicting how it is distributed between the years and how it varies across the country.

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