Savills: UK house prices won't recover until 2028

Britain's housing market won't recover until 2028, Savills says, with average house prices set to fall 1.5% in 2027 as higher mortgage rates linked to the war in the Middle East deter buyers and weigh on values.

The property firm expects prices to drift lower through the rest of 2026 before the drop next year, with the prolonged conflict undermining buyers' confidence and keeping mortgage rates higher for longer. Improving economic prospects and mortgage affordability should then support a recovery from 2028.

What does the forecast say about prices?

Savills expects house prices to rise by 15.8% — or £56,500 on average — over the five years to 2031. Values should start recovering in the second half of 2028.

First-time buyers will lead that recovery, Savills predicts, helped by deposit affordability and government initiatives including the Your First Home scheme. Growth should accelerate in the second half of 2028 and reach 3.5% for the year as a whole.

The strongest five-year growth in percentage terms is forecast across northern England, Wales and Scotland, supported by relative affordability and economic prospects.

How weak is the market right now?

Nationwide reported last week that UK house prices rose at an annual rate of just 0.5% in October — the slowest pace in more than two years. The average UK property price stood at £273,566, the lender said.

The Bank of England is widely expected to raise interest rates from 3.75% to 4% on Thursday, putting further pressure on mortgage rates. The move follows UK inflation rising to 3.5% in September.

More than 2.3 million UK households face a sharp rise in mortgage payments as they come off fixed-rate deals in 2027.

Why doesn't Savills expect a crash?

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."

She added: "We expect this will suppress activity and put pressure on prices next year. But this is unlikely to trigger a sharper correction."

Williams pointed to the resilience of homeowners who have already absorbed higher borrowing costs. "Most homeowners have already absorbed higher borrowing costs since late 2022, with relatively few still needing to refinance directly from rates below 2%, and the labour market remains resilient," she said.

What happens next?

The near-term picture stays soft. Prices drift lower through 2026, fall 1.5% in 2027, and only turn meaningfully in the second half of 2028 — meaning a recovery that Savills frames as gradual, not a sharp rebound, with the 2.3 million households refinancing in 2027 as the key pressure point to watch.