By Sohaib Shams
Britain's housing market recovery is set to be delayed until the second half of 2028, according to a new forecast from property firm Savills, as elevated mortgage rates continue to pressure activity and prices.
Price forecast and timeline
Savills predicts house prices will rise 15.8% (£56,500 on average) over the five years to 2031, but values are expected to start recovering only from late 2028. The average price could fall by £5,500 in 2027 as weak demand forces sellers to reduce asking prices. The firm anticipates a peak-to-trough decline of around 3%, with a 1.5% drop in 2027 alone, partly due to the prolonged Middle East conflict keeping mortgage rates higher for longer.
Regional outlook
The strongest five-year growth in percentage terms is forecast across northern England, Wales and Scotland, supported by relative affordability and economic prospects. London prices are projected to rise only 8% over the same period. Cities such as Manchester, Leeds, Liverpool and Bristol are expected to outperform, along with well-connected commuter areas offering better value.
Market drivers and expert views
Sarah Coles, head of personal finance at AJ Bell, warned that rising mortgage rates and an expected Bank of England rate hike will worsen the situation, causing some buyers to pause. Savills' Emily Williams said the Middle East conflict has delayed meaningful mortgage rate relief, suppressing activity but unlikely to trigger a sharp correction, as most homeowners have absorbed higher borrowing costs and the labour market remains resilient. Dan Hill noted that demand for larger family homes continues to be driven by flexible working patterns and changing demographics.
Annual cash changes and regional breakdown
Savills forecasts annual average price changes of -£5,500 in 2027, +£12,500 in 2028, +£18,500 in 2029, +£19,000 in 2030 and +£12,000 in 2031. Over the full period to 2031, the North West leads with a 23.3% increase (£62,000), followed by the North East at 22.2% (£45,500) and Scotland at 21.6% (£53,500), while London lags at 8.1% (£60,000).
