Britain's housing market recovery is expected to be delayed until 2028, with mortgage rates continuing to pressure activity and prices, according to a new forecast from property firm Savills.
Savills expects house prices to rise by 15.8 per cent – or £56,500 on average – over the next five years to 2031, with values beginning to recover from the second half of 2028.
Regional growth and market pressures
The strongest five-year house price growth in percentage terms is predicted across northern England, Wales and Scotland, supported by relative affordability and economic prospects, according to the forecast.
Savills also said that shifting buyer demographics will support demand for larger family homes. The firm expects house prices to drift lower over the remainder of 2026 and throughout 2027, resulting in a "peak-to-trough" decline of around 3.0 per cent.
Average mainstream house prices are forecast to fall by 1.5 per cent across 2027, as the prolonged conflict in the Middle East weighs on sentiment and keeps mortgage rates higher for longer. However, improving economic prospects and mortgage affordability are expected to underpin a recovery from 2028.
Affordability and buyer resilience
Emily Williams, director of residential research at Savills, said: "The drawn-out conflict in the Middle East has pushed back the prospect of meaningful mortgage rate relief, which will weigh on buyer sentiment and affordability.
"We expect this will suppress activity and put pressure on prices next year. But this 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 directly from rates below 2 per cent, and the labour market remains resilient.
"Together, these factors should keep forced sales low and limit further downward pressure on prices," Williams added.
Recovery outlook and regional forecasts
Savills anticipates that first-time buyers will spearhead the recovery from 2028, supported by deposit affordability and government schemes.
According to Savills, house price growth is expected to gather pace during the second half of 2028, reaching 3.5 per cent across the year. House price growth is subsequently forecast to hit 5 per cent in both 2029 and 2030, followed by a 3 per cent rise in 2031.
Dan Hill, residential research associate at Savills, said: "Markets combining relative affordability with strong employment and investment prospects are expected to outperform, including Manchester, Leeds, Liverpool and Bristol, alongside well-connected commuter locations offering better value than their surrounding regions.
"Property type will also remain an important driver of performance. Demand for larger family homes continues to be supported by flexible working patterns and changing buyer demographics."
Here are the cash changes in the average house price expected by Savills in the years ahead:
- 2027, minus £5,500
- 2028, plus £12,500
- 2029, plus £18,500
- 2030, plus £19,000
- 2031, plus £12,000
Below are the overall predicted percentage rises in average house prices, along with their cash equivalents, as forecast by Savills through to 2031:
- London, 8.1%, £60,000
- South East, 9.1%, £38,000
- East of England, 10.7%, £38,500
- South West, 13.5%, £44,500
- East Midlands, 15.7%, £41,500
- West Midlands, 16.3%, £47,000
- Yorkshire and the Humber, 21.0%, £53,000
- Wales, 21.0%, £43,500
- Scotland, 21.6%, £53,500
- North East, 22.2%, £45,500
- North West, 23.3%, £62,000
