UK house price recovery pushed back to 2028

Britain's housing market recovery has been pushed back to 2028, with property firm Savills now expecting prices to drift lower through the rest of 2026 and across 2027 before any meaningful rebound begins in the second half of 2028.

The delay is attributed to the drawn-out conflict in the Middle East, which Savills says has pushed back the prospect of meaningful mortgage rate relief and will keep weighing on buyer sentiment and affordability. The firm forecasts a peak-to-trough decline of around 3 percent, with average mainstream house prices falling 1.5 percent across 2027 — a cash drop of roughly £5,500 on the average home.

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

The reason a sharper correction stays off the table is structural rather than fortunate. Most homeowners have already absorbed higher borrowing costs since late 2022, Williams notes, with relatively few still needing to refinance directly from rates below 2 percent. The labour market remains resilient. Together these factors should keep forced sales low and limit downward pressure on prices — a market frozen in place rather than repriced.

Who that freeze serves is visible in the five-year map. Once recovery arrives, Savills expects the strongest percentage growth in northern England, Wales and Scotland — the North West at 23.3 percent, the North East at 22.2 percent, Scotland at 21.6 percent — regions where relative affordability leaves room to run. London, where affordability has been exhausted for two decades, manages just 8.1 percent, or £60,000 in cash terms, over five years. Across Britain as a whole, prices are forecast to rise 15.8 percent to 2031 — £56,500 on the average home.

First-time buyers are expected to lead the recovery from 2028, helped by deposit affordability and government initiatives. Until then, cities combining affordability with strong employment prospects — Manchester, Leeds, Liverpool and Bristol — are expected to outperform, alongside commuter locations offering better value than their surrounding regions.

The average house price falls £5,500 in cash terms across 2027, then rises £12,500 in 2028, £18,500 in 2029, £19,000 in 2030 and £12,000 in 2031.