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Savills forecasts a 1.5% fall in British house prices in 2027
Developing story first seen 4 hours ago
Savills has forecast that British house prices will fall by 1.5% in 2027, as conflict in the Middle East keeps mortgage rates higher for longer and deters buyers. The firm expects the sluggish market to recover from 2028, with prices beginning to rise in the second half of that year.
Savills predicts prices will increase by 15.8%, or £56,500 on average, over the five years to 2031, with growth reaching 3.5% in 2028. Nationwide reported annual price growth of 0.5% in October, when the average UK home cost £273,566; more than 2.3 million households are due to leave fixed-rate mortgage deals in 2027. Savills says affordability and economic prospects could support stronger five-year growth in northern England, Wales and Scotland.
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In short
- Savills forecasts a 1.5% house price fall in 2027.
- The firm expects recovery to begin in the second half of 2028.
- More than 2.3 million households face mortgage deal changes in 2027.
How this story developed
- 29 minutes ago Savills expects Britain’s housing market to remain weak until 2028, as the Middle East conflict keeps mortgage rates higher for longer and discourages buyers. Prices are forecast to fall next year, though the firm does not expect a sharper correction.
- 35 minutes ago Savills has forecast that British house prices will fall by 1.5% in 2027, as conflict in the Middle East keeps mortgage rates higher for longer and deters buyers.
Full account
Savills expects British house prices to fall by 1.5% in 2027, as a prolonged conflict in the Middle East delays relief on mortgage costs and discourages buyers. The property company forecasts little or no average price growth in 2026, followed by a gradual recovery from the second half of 2028. It says the downturn is likely to be limited rather than a sharp correction.
The company attributes the weaker outlook to mortgage rates staying higher for longer, which could constrain affordability, buyer confidence and housing transactions. Savills expects average mortgage rates on new deals to remain above 5% until early 2028. Its research director, Emily Williams, said many homeowners had already adjusted to higher borrowing costs since late 2022, while a resilient labour market should limit forced sales.
Savills forecasts prices to rise by 3.5% in 2028 and by 5% in each of 2029 and 2030. Across the five years to 2031, it expects an overall increase of 15.8%, equivalent to about £56,500 on average. It predicts the strongest percentage gains over that period in northern England, Wales and Scotland, where relative affordability and economic prospects are expected to support growth. First-time buyers are forecast to help lead the recovery, with growth gathering pace in the latter half of 2028.
The near-term outlook comes amid subdued market data: Nationwide reported annual price growth of 0.5% in October and an average UK price of £273,566. The source reports also point to pressure from households moving off fixed-rate mortgage deals in 2027. Savills’ forecast is not shared by all commentators: Connells Group, as reported by one outlet, expects prices to rise next year. The reports also describe different signals in mortgage markets, with one highlighting the prospect of a Bank of England rate increase and another noting that some lenders had recently cut mortgage rates.
Where outlets differ
From the full account, which is AI-written from the sources:
One report says the Bank of England is widely expected to raise its base rate from 3.75% to 4% on Thursday and notes that more than 2.3 million households face higher payments when fixed deals end in 2027. The other gives an additional forecast of a 4.25% base rate next year and says some lenders had cut mortgage rates that week.
The reports present Savills’ near-term numbers with different levels of detail: one describes prices drifting down through 2026 and a 1.5% decline in 2027; the other specifies zero average growth in 2026, a fall of about £5,500 in 2027 and a peak-to-trough decline of around 3%.
One report highlights the expected role of first-time buyers and the Your First Home scheme in the recovery. The other places more emphasis on falling transaction volumes and contrasts Savills’ forecast with Connells Group’s expectation of price rises from 2027.
The second source is incomplete at the end, so its reference to Oxford Economics does not provide a full account of that firm’s outlook.
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The case for
A modest fall in house prices could help affordability, particularly for first-time buyers who have been priced out after years of increases. Savills’ forecast of a limited decline followed by renewed growth also suggests the market may adjust without a sharper correction that could harm homeowners and unsettle the wider economy.
The case against
A forecast fall may overstate the case for lower prices: mortgage costs could ease, and continued housing demand alongside limited supply could support values. Even if the decline occurs, a 1.5% drop may do little to improve affordability, while higher borrowing costs and millions of households refinancing could put pressure on buyers and existing owners alike.
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Originally published by The Guardian as “Britain’s housing market unlikely to recover until 2028, says Savills”.