Property consultancy Savills has projected that the UK housing market will not see meaningful recovery until 2028, citing geopolitical tensions affecting mortgage rate expectations as a primary headwind. The firm anticipates house prices will continue drifting downward through the remainder of this year and decline by 1.5% in 2027 before stabilizing and recovering thereafter.
The outlook reflects challenging near-term conditions for buyers and sellers. Savills forecasts that improving economic conditions and enhanced mortgage affordability will support the anticipated recovery starting in the second half of 2028. Looking further ahead, the firm predicts house prices will appreciate by 15.8% cumulatively, or approximately £56,500 on average, across the five-year period through 2031.
Current market data underscores the slowdown. Nationwide reported that UK house prices increased at an annual rate of just 0.5% in October, marking the slowest growth pace in more than two years, with the average property price at £273,566. The Bank of England is expected to raise interest rates to 4% from 3.75%, which will add further pressure on mortgage costs. This development comes as inflation reached 3.5% in September, sustaining expectations for higher borrowing costs.
A significant demographic challenge lies ahead, with more than 2.3 million UK households facing increased mortgage payments when fixed-rate agreements expire in 2027. Despite these pressures, Savills suggests the labor market remains resilient and most homeowners have already adjusted to elevated borrowing costs since late 2022. The firm expects first-time buyers will lead the recovery beginning in 2028, supported by deposit affordability improvements and government schemes such as the Your First Home initiative. Regional variations are anticipated, with northern England, Wales, and Scotland expected to experience the strongest percentage-based price growth over the five-year forecast period.
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