Savills: UK House Prices Unlikely to Recover Until 2028

British house prices are projected to remain stagnant or decline until 2028, according to forecasts from property firm Savills. The recovery is expected to be delayed by elevated mortgage rates and weakened buyer confidence driven by geopolitical instability in the Middle East, which prevents significant relief in borrowing costs.

Savills expects average house prices to drift lower throughout the remainder of 2026 before experiencing a 1.5% decline in 2027. This downward pressure coincides with a period of significant financial vulnerability for homeowners; more than 2.3 million UK households will face sharp increases in mortgage payments in 2027 as they transition off existing fixed‑rate deals.

The current market environment is already showing signs of deceleration. Nationwide reported last week that UK house prices grew at an annual rate of only 0.5% in October, marking the slowest pace of growth in over two years. At that time, the lender noted the average UK property price stood at £273,566.

Interest rate hikes and geopolitical tension suppress buyer sentiment

The Bank of England is widely expected to raise interest rates from 3.75% to 4% this Thursday, a move following a rise in UK inflation to 3.5% in September.

Emily Williams, the director of residential research at Savills, noted that the prolonged conflict in the Middle East has delayed the prospect of meaningful mortgage rate relief. This delay is expected to weigh heavily on buyer sentiment and general affordability throughout the coming year.

“We expect this will suppress activity and put pressure on prices next year. But this is unlikely to trigger a sharper correction,” said Emily Williams, director of residential research at Savills.

The firm pointed to the resilience of the labour market and the fact that most homeowners have already absorbed higher borrowing costs since late 2022. Very few remaining homeowners are currently required to refinance from rates below 2%.

House prices may recover by late 2028

Savills anticipates that house prices will begin to recover in the second half of 2028, with growth potentially accelerating to 3.5% for the full year. Over a five‑year horizon leading to 2031, the firm forecasts an average price increase of 15.8%, which equates to an average rise of £56,500 per property.

Growth is not expected to be uniform across the United Kingdom. According to Savills, the strongest five‑year percentage growth is forecast for northern England, Wales, and Scotland. These regions are expected to benefit from relative affordability compared to the south and improving economic prospects.

First‑time buyers are identified as the likely engine of the 2028 recovery. This resurgence is expected to be supported by a combination of improved deposit affordability and government‑led initiatives, such as the Your First Home scheme.