Savills has downgraded its UK house price growth forecast, now expecting prices to rise by just 1% in 2025 and 2% in 2026 — down from an earlier prediction of 4%. The revision comes amid growing concerns over potential property tax changes and wider economic uncertainty.
Over the next five years, the estate agent expects average home values to increase by around 22.2%, equivalent to roughly £80,000, though growth is forecast to vary significantly across different parts of Britain.
| 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | Total growth | |
| Average UK price growth (%) | 1.0% | 2.0% | 4.0% | 5.0% | 5.5% | 4.0% | 22.2% |
| Average UK house price (£) | £359,875 | £367,073 | £381,756 | £400,844 | £422,890 | £439,806 | £79,930 |
| Transactions | 1,175,000 | 1,150,000 | 1,170,000 | 1,175,000 | 1,180,000 | 1,190,000 | – |
| Base rate (year-end) | 4.00% | 3.50% | 3.00% | 2.75% | 2.50% | 2.50% | – |
| CPI inflation (year-end) | 3.8% | 2.6% | 2.3% | 2.1% | 2.1% | 2.0% | 11.6% |
| Nominal income growth | 3.3% | 2.4% | 2.4% | 3.4% | 3.2% | 2.9% | 15.3% |
| Real GDP growth | 1.4% | 1.0% | 1.5% | 1.8% | 1.6% | 1.6% | 7.7% |
Source: Savills Research using Oxford Economics and Nationwide* (Note: These forecasts apply to average prices in the second hand market. New build values may not move at the same rate.)
**Five-year figures represent total growth over the forecast period (including compounding), so are higher than the sum of the individual annual growth rates
Weaker sentiment and uncertainty surrounding the economy and tax environment have kept the UK housing market subdued through 2025.
Relatively high levels of supply have been met with softer demand, creating a buyer’s market where upward pressure on prices has been limited. Despite this, values have remained broadly stable, rising by 0.5% so far this year, according to Nationwide.
Savills expects both demand and price growth to remain subdued for the rest of 2025 and into early 2026.
Lucian Cook, head of residential research at Savills, commented: “Our previous forecast assumed falling interest rates would boost borrowing and investment, supporting house price growth. However, with inflation stuck at 3.8%, economists are less confident about the pace in which rate cuts will happen. Higher interest and mortgage rates next year, as well a weaker labour market, with a slight rise in unemployment and slowing wage growth, are likely to constrain price growth.
“The upcoming Budget also continues to weigh on the market, although we expect any announcements to have a much greater impact on prime values and transactions than the mainstream market. Direct changes to transactional taxes could alter the incentives that currently shape buyers’ housing decisions, while broader tax increases on certain population segments could reduce some prospective buyers’ capacity to finance home purchases. Ultimately, however, the biggest influence on the mainstream market will come from how financial markets react to the Budget itself.”
Over the longer term, while the pace of interest rate cuts is slower than expected, they will still play a role in boosting demand and driving price growth over the next five years, says Savills.
Further cuts will be supported by the relaxation of mortgage rules earlier this year, allowing some buyers to borrow more relative to their incomes. Beyond 2026, the UK economy is also expected to be materially stronger, with low inflation, rising GDP growth, falling unemployment, and an undersupply of new homes which will maintain upwards pressure on real prices.
Savills expects house prices to rise by 22.2% in the next five years, peaking in 2028 and 2029 at 5.0% and 5.5%, respectively.
Importantly, values will grow in real terms from 2028, for the first time since the end of 2022.
Transaction volumes are expected to dip in 2026, following this year’s boost from stamp duty changes. But over the next five years, increased affordability is expected to drive transaction volumes close to the pre-pandemic average.
“Housing is technically more accessible now than at any point in the last three years, thanks to lower mortgage rates, lower real house prices and looser mortgage regulation,” said Emily Williams, director research at Savills. “But none of this matters unless buyers feel confident enough to commit – and weaker sentiment is holding back transactions.”
This has been less true for first-time buyers, whose purchasing power has improved the most. They remain the only buyer group with activity significantly above pre-Covid levels.
Looking ahead, the Renters’ Rights Act will provide younger households with more security in that sector but will do little to increase the availability of homes. As a result, Savills expects first-time buyer numbers to remain robust over the next couple of years.
For second steppers, slower price growth for flats is limiting their ability to build equity to move up the ladder in the short term, but as rates fall, mortgaged home movers should trend up.
Meanwhile, buy-to-let transactional activity has been sustained by smaller landlords selling up to larger ones. This is expected to ramp up once the Renters Rights Bill becomes law, supported by lower rates and higher rents, although tighter regulation and taxation will limit growth of this sector.
The pandemic-driven disruption which largely drove regional growth over the past five years has now largely worked its way through the system. Savills’ forecast now anticipates that affordability will once again become the key influence on house price performance.
“Regional performance is largely influenced by where we are in the housing market cycle. Since 2016, we’ve been in the second half of the cycle, where the more affordable regions in the North and Scotland outperform the UK average, and capacity for growth in London and the South is more limited,” comments Dan Hill, research analyst at Savills.
“In the absence of any whole market price correction, this pattern is likely to persist for the next five years, with the strongest growth shifting to late-stage markets in the North East, Scotland & Wales.”
More affordable regions have proved most resilient in 2025. By the end of Savills forecast period, values in the North West are expected to sit just 15% below the UK average, narrowing from nearly 30% a decade earlier. Meanwhile, London prices are set to be 33% above the average – down from 70% in 2017, laying the groundwork for renewed outperformance in the 2030s.
Regional house price forecasts, 2026-2030
| 2026 | 2027 | 2028 | 2029 | 2030 | 5 years to 2030 | |
| Yorkshire and The Humber | 3.5% | 5.5% | 6.0% | 6.0% | 5.0% | 28.8% |
| North East | 3.5% | 5.5% | 6.0% | 6.0% | 5.0% | 28.8% |
| Scotland | 3.0% | 5.0% | 6.0% | 6.0% | 5.0% | 27.6% |
| Wales | 3.0% | 5.0% | 6.0% | 6.0% | 5.0% | 27.6% |
| North West | 3.0% | 5.5% | 6.0% | 6.0% | 4.5% | 27.6% |
| West Midlands | 2.5% | 4.5% | 5.5% | 6.0% | 4.0% | 24.6% |
| East Midlands | 2.5% | 4.0% | 5.5% | 6.0% | 4.0% | 24.0% |
| UK | 2.0% | 4.0% | 5.0% | 5.5% | 4.0% | 22.2% |
| South West | 2.0% | 4.0% | 5.0% | 5.0% | 3.5% | 21.0% |
| East of England | 1.5% | 3.5% | 4.5% | 5.0% | 3.5% | 19.3% |
| South East | 1.0% | 3.0% | 4.0% | 4.5% | 3.5% | 17.0% |
| London | 0.0% | 2.0% | 3.5% | 4.5% | 3.0% | 13.6% |
Source: Savills Research
*Five-year figures represent total growth over the forecast period (including compounding), so are higher than the sum of the individual annual growth rates
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