By Sohaib Shams
A new report from real estate firm Savills projects that UK house prices will rise by 15.8% over the five years to 2031, but a meaningful recovery is not expected until the second half of 2028 as elevated mortgage rates continue to weigh on activity.
Recovery delayed to 2028
Prior to the turnaround, house prices are forecast to drift downwards through the rest of 2026 and across 2027, resulting in a peak-to-trough drop of roughly 3.0%. Average mainstream values are predicted to fall by 1.5% in 2027 alone, as the ongoing conflict in the Middle East dampens sentiment and keeps mortgage rates higher for longer.
Regional growth projections
The highest percentage growth over the five-year period is expected across northern England, Scotland and Wales, driven by relative affordability and economic fundamentals. Savills forecasts the following regional increases by 2031: North West 23.3%, North East 22.2%, Scotland 21.6%, Yorkshire and the Humber 21.0%, Wales 21.0%, West Midlands 16.3%, East Midlands 15.7%, South West 13.5%, East of England 10.7%, South East 9.1%, and London 8.1%.
Analyst comments
Emily Williams, director of residential research at Savills, said the drawn-out Middle East conflict has pushed back the prospect of meaningful mortgage rate relief, suppressing activity and pressuring prices next year. She noted that most homeowners have already absorbed higher borrowing costs since late 2022 and the labour market remains resilient, which should keep forced sales low. Dan Hill, residential research associate, added that markets combining affordability with strong employment and investment prospects — such as Manchester, Leeds, Liverpool and Bristol — are expected to outperform. Demand for larger family homes continues to be supported by flexible working patterns and changing buyer demographics.
Annual cash adjustments
Savills anticipates the following average cash adjustments: a decline of £5,500 in 2027, followed by increases of £12,500 in 2028, £18,500 in 2029, £19,000 in 2030 and £12,000 in 2031. First-time buyers are expected to lead the market recovery from 2028, aided by deposit affordability and government support schemes.
