Savills forecasts UK house price recovery delayed until late 2028

UK house prices are not anticipated to recover from the current market slump until the second half of 2028, with London projected to experience the weakest performance among all regions. New research from estate agency Savills indicates that the average national house price will decline by a further 1.5 per cent in 2027. This downturn is attributed to soaring mortgage rates resulting from the war in Iran, which has prompted prospective buyers to delay moves amid persistent inflation concerns.

Emily Williams, director of residential research at Savills, noted that the prolonged Middle East conflict has delayed meaningful mortgage-rate relief. This situation is expected to weigh on buyer sentiment and affordability, suppressing activity and exerting downward pressure on prices next year. Despite this short-term decline, the market is forecast to recover over the next five years. By 2031, house prices are expected to have grown by 15.8 per cent, a figure that exceeds the projected income growth of 14.4 per cent over the same period.

However, London homeowners are set to miss out on this broader reprieve. Prices in the capital are projected to grow by just 8.1 per cent over the five years to 2031, the lowest increase among UK regions. This contrasts sharply with the North West, where prices are expected to rise by 23.3 per cent, and the North East, with a projected 22.2 per cent increase. The capital’s high price levels have led to steep stamp duty charges, forcing sellers to reduce asking prices. The average London house price is now more than 11 times the average salary, compared to six times typical earnings in the three northern regions of England.

Dan Hill, a residential research associate at Savills, stated that markets combining relative affordability with strong employment prospects are expected to outperform. Cities such as Manchester, Leeds, Liverpool and Bristol, alongside well-connected commuter locations, are likely to see better value. He added that property type will remain a key driver of performance, with demand for larger family homes supported by flexible working patterns. Conversely, flats face headwinds from affordability constraints, building safety concerns and greater supply.