House prices are expected to rise by 20% in the next five years as lower mortgage rates bring buyers back to the market, according to JLL.

The property services firm revised its forecasts for the 2025-2029 period in the wake of the Chancellor’s Budget. It expects a lack of supply and more competitive mortgage rates to fuel house prices over the next five years, despite the government’s ambitions to accelerate housebuilding.

London house prices are expected to increase by 21.6% over the five-year period, underpinned by a lack of new homes reaching the market for sale.

JLL expects lower value markets to see stronger growth towards the beginning of the five-year forecast period, with more expensive markets outperforming as the rate cutting cycle persists into 2026 and 2027.

Rental prices will be 17% higher by the end of 2029, it predicts. Despite exceeding inflation and wage growth over the period, the business anticipates the increase in sales activity will lead to slower increases.

Marcus Dixon, director of residential research at JLL, says: “Despite jitters in the run-up to Labour’s first Budget in 14 years, the chancellor’s announcements last week have done little to budge our headline forecasts for the residential sales and rentals markets.

“Yet challenges persist. EPC C deadlines could see landlords offloading less efficient properties or removing them from the market for retrofitting and pushing rents up further, while the Renters Right Bill could limit growth in some markets and prompt landlords to exit.

“The government is right to set out ambitious targets to both bolster housebuilding and support renters. What’s needed now is a clear roadmap for coming good on its objectives.”

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