Expert Phil Spencer discusses potential home prices, mortgage rates, and his most profitable investment in the property market.
Title: Sitting Down with Property Expert Phil Spencer: Real Estate Insights and Predictions
Hey there! Let's dive into the world of property with Phil Spencer, a property expert, TV presenter, author, businessman, and co-presenter of the long-running Channel 4 show, Location, Location, Location.
This month, we're chatting with Phil about the current state of the property market, including mortgage rates, house prices, buy-to-let, housebuilding, and even his personal investments. So, let's get started!
- House Prices in the Next 12 Months
Predicting the housing market is like staring into a crystal ball, Phil says. While he's stopped trying to provide exact answers, he does share some insights. The only number that truly matters is your local market, as the balance between supply and demand dictates pricing trends. For instance, with more buyers than sellers in much of northern England and Northern Ireland, prices are on the rise, whereas in London and southeast England, there's an abundance of available properties, keeping values in check. Additionally, lower mortgage interest rates encourage more buying and bigger loans, which usually bump up house prices. On the whole, Phil believes average prices will climb over the next year, but the pace will differ significantly between the north and south regions.
- House Prices Over the Next Decade
Predicting the housing market a decade ahead is virtually impossible, Phil admits. However, using historical data and taking potential unforeseen events into account, the likelihood is that prices will keep rising over the next decade. For one, the UK population is growing, and we're not constructing enough new homes to keep pace. This ongoing home shortage means continued upward pressure on house prices, even in a economy with persistent boom and bust cycles.
- Mortgage Rates in 12 Months
Forecasting mortgage rates is less tricky, thanks to the mortgage industry's trackable trends. The Bank of England base rate, known as the swap rate, directly impacts mortgage rates. With two base rate cuts so far in 2025, lenders have been able to reduce their mortgage rates. Some are now offering rates below 4%, though these are primarily offered to those with substantial deposits. The swaps market suggests there will be another cut to the base rate in the second half of 2025, which should motivate further mortgage rate reductions. By next year, it is likely that we'll see more mortgages with interest rates starting with a 3 rather than a 4, though rates may not plummet below 3% again anytime soon.
- Meeting Labour's 1.5 Million Home Target
Labour seeks to construct 300,000 new homes per year for the current parliament, an ambitious target. The UK has not built at that pace for over half a century, and challenges ahead for the construction industry include:
a. Cutting red tape to make it simpler for developers to acquire land and build homes b. Addressing the chronic labor shortage in the construction sector, as the average age of a construction worker is now over 50, and there aren't enough young people entering the workforce c. Recruiting and keeping young people in the construction industry to ensure a steady stream of skilled workers in the future
- Urgent Property Crisis: The Private Rental Market
The private rental sector is experiencing a brewing crisis that's not yet receiving enough attention. One in five UK households currently rents their home, and half of these landlords only own a few properties. When these landlords decide to sell, there are usually few—if any—buy-to-let investors waiting in the wings to take their place. This dwindling supply of rental properties is driving up rents rapidly, with average rents increasing 7.4% year-on-year. While rising house prices hog the spotlight, skyrocketing rents are a serious issue for the millions of people who either can't afford or don't wish to buy a home.
- Targeting Landlords
While there are bad landlords out there, they represent a small fraction of the total landlord population. Good landlords should not be lumped in with the bad apples, Phil contends. The upcoming Renters’ Rights Bill will change the rules governing England's rental sector, offering increased protections to tenants and placing strict restrictions on landlords. Critics argue that the bill may unintentionally make it harder for good landlords to evict uncooperative tenants, which could eventually lead to good landlords abandoning the rental sector altogether.
- Buy-to-Let Investment Today
Six months ago, the case for buy-to-let seemed weak, given the escalating costs of being a landlord in some areas. The 5% stamp duty surcharge on investment properties, introduced in the October 2025 Budget, discouraged many investors. However, reduced mortgage costs and continuing rental value growth make buy-to-let a potentially sound investment if you're strategic about your location and have a long-term perspective. Keep in mind that returns won't be at the same level as in the past, and owning rental properties is a substantial commitment. Maintenance, vacancies, compliance with numerous regulations, and dealing with problematic tenants can be challenging.
- Advice for Chancellor of the Exchequer
Phil's advice to the Chancellor of the Exchequer to assist first-time buyers: abolish stamp duty for first-time buyers. Such a move would help more people get on the property ladder and remove barriers that unfairly disadvantage those without financial assistance from family.
- Selling Your Home: Top Tips
Phil's #1 selling tip: Declutter. A clean, organized space presents better to potential buyers and can increase the perceived value of your home.
- Best Property Investment Ever
Phil's best property investment was a flat he bought in Battersea in 1996. The property had four bedrooms and four reception rooms, but was too large to function as a traditional flat. Recognizing its potential, Phil converted it into two flats, investing around £80,000. He kept the back apartment, which had two double bedrooms, a dining room, a living room, and kitchen/breakfast room over two levels. After three years, he sold the flat for £292,000, a significant return on his initial investment.
- Although mortgage rates are subject to periodic changes, Phil Spencer suggests that rates will likely remain below 4% for those with substantial deposits in the next 12 months.
- In addition to his successful real estate ventures, Phil Spencer also considers his investment in a flat in Battersea, which he converted into two flats in 1996, his best property investment ever.
- When it comes to investing in buy-to-let properties, Phil Spencer encourages a strategic approach, focusing on long-term growth and choosing the location wisely, despite escalating costs for landlords in certain areas.
- In order to help more first-time buyers in the UK, Phil advises the Chancellor of the Exchequer to abolish stamp duty for first-time buyers, aiming to remove financial barriers that currently disadvantage them.
