Savills Forecasts UK Housing Recovery Delayed Until 2028
Savills predicts the British housing market will not recover until late 2028 due to high mortgage rates and geopolitical instability.
Property firm Savills forecasts that the British housing market will not recover until the second half of 2028. The firm attributes this delay to high mortgage rates and diminished buyer confidence stemming from the prolonged conflict in the Middle East. House prices are expected to drift lower through 2026 and fall by 1.5% in 2027, creating a total peak-to-trough decline of approximately 3.0%.
Despite the near-term decline, Savills predicts a recovery led by first-time buyers, with average prices rising by 15.8% over the five years leading to 2031. The strongest growth is expected in Scotland, Wales, and northern England. Residential research associate Dan Hill noted that markets combining affordability with strong employment, such as Manchester, Leeds, Liverpool, and Bristol, are expected to outperform.
Market pressure is mounting as the Bank of England is expected to raise interest rates from 3.75% to 4% this Thursday following a rise in September inflation to 3.5%. This trend is reflected in recent data from Nationwide, which reported that UK house prices rose by only 0.5% in October, marking the slowest pace of growth in over two years.
