House prices to fall through 2027, recovery expected in 2028

Summarised from 4 outlets · Updated 4 Nov, 00:16 · Archive

UK house prices are forecast to fall by 1.5 per cent in 2027 before recovering from the second half of 2028, according to new research from estate agency Savills. The firm expects prices to experience a total peak-to-trough decline of around 3 per cent over the remainder of 2026 and through 2027.

Savills attributes the weakness to the prolonged conflict in the Middle East, which is keeping mortgage rates higher for longer and weighing on buyer sentiment. Emily Williams, director of residential research at Savills, said the conflict 'has pushed back the prospect of meaningful mortgage-rate relief, which will weigh on buyer sentiment and affordability'. The firm does not expect average mortgage interest rates to drop below 5 per cent until early 2028.

From 2028 onwards, the outlook improves. Savills forecasts 3.5 per cent growth in 2028, followed by 5 per cent growth in both 2029 and 2030. Over the five years to 2031, average UK house prices are forecast to rise by 15.8 per cent, or £56,500 in cash terms, exceeding income growth of 14.4 per cent.

Regional variations are stark. The strongest five-year house price growth is forecast across northern England, Wales and Scotland, supported by relative affordability and economic prospects. The North West is expected to see 23.3 per cent growth and the North East 22.2 per cent. London, however, is set to experience the weakest recovery, with prices growing by just 8.1 per cent to 2031. London homeowners have been particularly affected by recent sharp price falls, as the capital's typically high prices make stamp duty charges especially heavy and force sellers to cut asking prices.

Williams added that the weakness is unlikely to trigger a sharper correction. Most homeowners have already absorbed higher borrowing costs since late 2022, with relatively few still needing to refinance from rates below 2 per cent, and the labour market remains resilient. Savills also expects changing buyer demographics to support demand for bigger family homes as prices recover.

How it is being reported

• UK housing market recovery set to be delayed amid Middle East conflictA new report has revealed how a rebound in Britain’s housing market is likely to be delayedThe Independent · 4 Nov, 00:01
• House prices to fall 1.5% next year before typical growth of £62,000 by 2031, upmarket estate agent predictsThe prolonged war across the Middle East has 'delayed' mortgage-rate relief for borrowers, Savills said.This is Money · 4 Nov, 00:01
• House prices set to fall until 2028, with London hit hardestHouse prices are not expected to recover from the UK’s property market slump until the second half of 2028, with London set to be the country’s worst-hit region. The average house price in the UK is set to fall by a further 1.5 per cent in 2027, according to new research from estate agency Savills, [...]City AM · 4 Nov, 00:01
• Britain’s housing market recovery ‘set to be delayed until 2028’Property firm Savills said it expects values across Britain generally to start recovering from the second half of 2028.Evening Standard · 4 Nov, 00:01

In this story: Savills · Emily Williams · London · North West · North East · UK · Middle East · Wales

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