UK house prices projected to fall through 2027 before modest recovery in 2028

UK house prices are expected to continue falling until at least the second half of 2028, according to a forecast by estate agency Savills. The agency predicts an average price drop of 1.5% in 2027, erasing roughly £5,500 from the typical home value, as higher mortgage rates and buyer caution persist.

Regional analysis shows the greatest declines next year in London, the South East and the East of England, each projected to fall about 3.5%, while the North is forecast to see a modest 1% increase. The downturn follows the outbreak of war in Iran in February, which has lifted energy costs and prompted the Bank of England to raise rates to 4.25% by the end of the year.

"The drawn-back conflict in the Middle East has pushed back the prospect of meaningful mortgage rate relief," said Emily Williams, director of residential research at Savills. "This in turn will suppress activity and put pressure on prices next year."

Savills expects house-price growth to flatline in 2026, meaning homeowners may wait over two years for any price increase. Economic forecaster Oxford Economics anticipates the Bank of England will resume rate cuts in early 2028. Savills projects a recovery beginning in the summer of 2028, with mortgage rates easing and the government's first-time buyer equity loan scheme, "Your First Home," supporting demand. The agency forecasts a 3.5% rise that year, adding about £12,500 to the average UK home value.

"Even as borrowing costs start to fall, buyers will take time to adjust their expectations and test affordability," Williams added. "Stronger economic growth in 2028 should also boost buyer confidence, and combined with the normal lag between mortgage approvals and completed sales, this means we expect house price growth to gain traction in the second half of 2028."

The outlook suggests larger family homes would benefit most from any rebound, while flats are likely to continue lagging.