UK house prices won't hit bottom until 2028, Savills warns

Britain's housing market is stuck in the slow lane until 2028, according to Savills. The property firm expects average prices to drift lower for the rest of 2026 and drop by 1.5% in 2027, blaming mortgage rates kept high by the drawn-out war in the Middle East. Buyers' confidence, it says, is taking the hit.

The numbers already look grim. Nationwide reported last week that UK house prices grew at an annual rate of just 0.5% in October — the weakest in more than two years — with the typical home costing £273,566. Savills expects the Bank of England to twist the screw further, widely tipped to lift its base rate to 4% on Thursday from 3.75% after inflation hit 3.5% in September.

The pain lands hardest on homeowners rolling off cheap deals. More than 2.3m UK households face a sharp jump in mortgage payments when their fixed rates expire in 2027. Even so, Savills doesn't see a crash: most owners have already swallowed higher borrowing costs since late 2022, and few are still refinancing from sub-2% deals.

Emily Williams, Savills' director of residential research, said the Middle East conflict has pushed back any meaningful mortgage rate relief. She said that will weigh on buyer sentiment and affordability, suppress activity and pressure prices next year — but is unlikely to trigger a sharper correction. A resilient labour market, she added, helps keep the floor in place.

The turnaround, when it comes, starts in the second half of 2028. Savills forecasts house prices climbing 15.8% over the five years to 2031 — about £56,500 on average — with growth accelerating to 3.5% across 2028. First-time buyers are expected to lead the charge, helped by deposit affordability and government schemes including Your First Home.

Not every region waits its turn. The strongest five-year percentage growth is pencilled in for northern England, Wales and Scotland, where relative affordability and brighter economic prospects do the heavy lifting.