Savills house price forecast sees 1.5% fall before recovery

Average mainstream UK house prices are forecast to fall by a further 1.5% in 2027 before recovering from 2028. That is the verdict of the Savills house price forecast published on 4 November 2026. Over the five years to 2031, Savills expects average prices to rise by 15.8%, or £56,500. The reason for the delay is the prolonged conflict in the Middle East, which Savills says keeps mortgage rates higher for longer.

What does the Savills house price forecast say year by year?

The data shows a flat calendar year, a dip, then a climb. Savills' forecast table puts UK house price growth at 0.0% for 2026, -1.5% for 2027 and 3.5% for 2028 (Savills, 4 November 2026). It then forecasts 5.0% in both 2029 and 2030, and 3.0% in 2031.

In cash terms, the 2027 fall is worth -£5,500 on the average home, and 2028 adds back £12,500, according to the same table. The forecast covers the mainstream market (the majority of UK housing markets, where prices are driven by mortgaged buyers). It relates to average prices in the second-hand market, and Savills notes that new build values may not move at the same rate.

Savills expects prices to keep falling over the remainder of 2026 and through 2027. It puts the total peak-to-trough decline (the drop from the highest price to the lowest before recovery) at around 3.0%. Growth is then expected to accelerate during the second half of 2028.

The slowdown is already visible in lender data. Nationwide's October 2026 House Price Index shows annual growth softening to 0.5%, from 0.8% in September. That is the slowest pace since January 2024, and prices were unchanged month on month. Nationwide put the average price at £273,566 (not seasonally adjusted).

Why is the recovery delayed until 2028?

It comes down to the cost of borrowing. Savills says the interest rate outlook has continued to deteriorate since its previous forecast in June 2026. Average mortgage rates are now not expected to fall below 5% until early 2028.

The forecast's own assumptions spell this out. Savills assumes an average mortgage rate of 5.32% at the end of 2026, 5.09% at the end of 2027 and 4.23% at the end of 2028. That is a gap of 1.09 percentage points between the end of 2026 and the end of 2028. You can test a deal against rates like these with our free buy-to-let stress test calculator.

The Bank of England has already moved. The Monetary Policy Committee (MPC, the panel that sets Bank Rate) held its meeting ending on 4 November 2026. It voted 8-1 to raise Bank Rate by 0.25 percentage points to 4%, according to its November 2026 Monetary Policy Summary. That matches the 4.00% year-end base rate in Savills' assumptions, which then rises to 4.25% at the end of 2027 before falling to 3.25% at the end of 2028.

The Bank's minutes add two housing signals. Benchmark two-year mortgage rates had risen by nearly 50 basis points (0.5 percentage points) since the beginning of September, and new mortgage approvals for households had been falling. The same summary says CPI (consumer prices index) inflation rose to 3.5% in September, which we covered in our report on inflation hitting 3.5%.

"But this is unlikely to trigger a sharper correction," said Emily Williams, director of residential research at Savills. She pointed to homeowners who have already absorbed higher borrowing costs since late 2022, and to a labour market that remains resilient.

Which regions does Savills expect to outperform?

The gap between north and south is the underlying picture. Savills forecasts the strongest five-year growth in the North of England, Wales and Scotland. The North West leads at 23.3%, followed by the North East at 22.2%, Scotland at 21.6%, and Yorkshire and the Humber and Wales at 21.0% each.

At the other end, Savills forecasts 8.1% for London, 9.1% for the South East and 10.7% for the East of England over the same five years. The gap between the North West and London is 15.2 percentage points. Compared with the UK figure of 15.8%, the West Midlands sits just above at 16.3% and the East Midlands just below at 15.7%.

The split starts early. For 2027, Savills forecasts falls of 3.5% in London, the South East and the East of England. Scotland, the North East and the North West are forecast to rise 1.0%. Savills ties the pattern to affordability: "In the three northern regions, average house prices remain below six times average earnings." In London, the figure is 11.3.

Savills also expects houses to keep outperforming flats. Dan Hill, residential research associate at Savills, named Manchester, Leeds, Liverpool and Bristol among markets expected to outperform. If you are comparing strategies across regions, our guides to property investment strategies set out the main options.

What does the forecast mean for buy-to-let investors?

Savills gives a clear view of the rental sector. It says lower returns, increased regulation and higher taxation will keep buy-to-let (BTL) activity below its long-term average. It also expects this to accelerate the shift towards larger, professional landlords.

Transaction volumes are forecast to fall in 2027 as higher mortgage rates weigh on buyer appetite, according to Savills. Activity should begin to recover from 2028, but the pace will vary between buyer groups. First-time buyers are expected to lead, with deposit affordability at its best level since 2008. Savills expects them to overtake cash buyers as the largest buyer group by 2029, supported in part by the Government's Your First Home scheme.

For an investor, Savills' figures point to further price falls in London, the South East and the East of England through 2027. We tracked the early signs in our analysis of record asking price cuts. If you plan to sell from 2028 onwards, Savills' forecast makes first-time buyers the group expected to lead demand.

The forecast carries risks in both directions. Savills says geopolitical uncertainty and domestic political risks, such as a general election called in 2027, could delay a recovery. A faster than expected easing of those risks could bring an earlier recovery and stronger growth.

Key takeaways

• Savills forecasts average mainstream UK house prices to fall 1.5% in 2027 and rise 15.8%, or £56,500, over the five years to 2031.

• Savills does not expect average mortgage rates to fall below 5% until early 2028, and assumes 5.32% at the end of 2026.

• Savills forecasts five-year growth of 23.3% in the North West against 8.1% in London, a gap of 15.2 percentage points.

• The Bank of England raised Bank Rate by 0.25 percentage points to 4% at its meeting ending on 4 November 2026.

• Savills expects buy-to-let activity to stay below its long-term average, with first-time buyers leading the recovery from 2028.