Forecast points to subdued growth until early 2026 before stronger gains pick up again
Average house prices in the UK are projected to climb by £80,000 over the next five years, according to the latest forecast from Savills.
The property consultancy’s new report anticipates a 2% increase in 2026, equating to a rise of £7,200, and a total growth of 22.2% by 2030.
The housing market has remained subdued throughout 2025, with economic uncertainty and concerns about taxation dampening sentiment. According to the Royal Institution of Chartered Surveyors (RICS), a relatively high number of properties for sale has coincided with weaker demand, resulting in limited upward pressure on prices. Nevertheless, values have edged up by 0.5% so far this year, based on Nationwide data.
Savills expects both demand and price increases to remain modest for the rest of 2025 and into early 2026.
“Our previous forecast assumed falling interest rates would boost borrowing and investment, supporting house price growth,” said Lucian Cook (pictured right), head of residential research at Savills. “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.”
Cook added that the upcoming Budget also continues to weigh on the market, although it is expected that any announcements will 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,” he said. “Ultimately, however, the biggest influence on the mainstream market will come from how financial markets react to the Budget itself.”
Looking further ahead, Savills expects that interest rate reductions—though slower than previously anticipated—will still support demand and price growth over the next five years. The relaxation of mortgage lending rules earlier in 2025 is expected to help some buyers access larger loans. From 2026 onwards, forecasts suggest the UK economy will strengthen, with lower inflation, higher GDP growth, falling unemployment, and a shortage of new homes contributing to upward pressure on prices.
With house prices expected to rise by over a fifth in five years, the strongest annual increases predicted for 2028 and 2029 at 5% and 5.5%, respectively. Real-terms price growth is anticipated to resume from 2028, marking the first such increase since 2022.
Transaction numbers are forecast to dip in 2026 following a temporary boost from recent stamp duty changes. Over the longer term, improved affordability is expected to bring transaction volumes closer to pre-pandemic levels.
“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 (pictured right), director of research at Savills. “But none of this matters unless buyers feel confident enough to commit – and weaker sentiment is holding back transactions.”
First-time buyers have been less affected by subdued sentiment, with their purchasing power improving the most. They remain the only group with activity significantly above pre-pandemic levels. The Renters’ Rights Act is expected to provide greater security for younger households, but is unlikely to increase the supply of homes, so first-time buyer activity is expected to remain robust.
For those looking to move up the property ladder, slow price growth for flats is limiting equity gains in the short term. However, as interest rates fall, activity among mortgaged home movers is expected to increase.
Buy-to-let transactions have been supported by smaller landlords selling to larger investors. This trend is expected to accelerate as the Renters’ Rights Bill recently became a law, aided by lower rates and higher rents, though tighter regulation and tax changes will constrain growth in this sector.
Savills’ forecast suggests that affordability will once again become the main driver of regional house price performance, as the effects of pandemic-related disruption fade. More affordable regions in the North and Scotland are expected to outperform the UK average, while growth in London and the South will be more limited.
By the end of the forecast period, values in the North West are expected to be just 15% below the UK average, compared with nearly 30% a decade ago. London prices are projected to be 33% above the average, down from 70% in 2017, potentially setting the stage for renewed growth in the capital in the 2030s.
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