Its research forecast mainstream residential UK house prices to fall by a further 1.5% in 2027, but rise by 3.5% in 2028.
Savills then forecasts prices to grow by 5% in both 2029 and 2030. It attributed this to mortgage rates reaching their lowest levels and income growth having outpaced house price growth for six consecutive years, improving buyers’ purchasing power.
Emily Williams, director of residential research at Savills, said the conflict in the Middle East was delaying sooner recovery.
“The drawn-out conflict in the Middle East has pushed back the prospect of meaningful mortgage-rate relief, which will weigh on buyer sentiment and affordability. We expect this will suppress activity and put pressure on prices next year,” she said.
Stronger growth in Northern England
Savills forecast house price growth of 15.8% over the next five years, compared with projected income growth of 14.4% and Consumer Prices Index (CPI) inflation of 9.8%.
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Five-year house price growth is expected to be strongest in the North West at 23.3%. It is also among the four other regions where no decline in house prices is anticipated at any point up to 2031 – these being Yorkshire and the Humber, Wales, Scotland, and the North East.
Dan Hill, residential research associate at Savills, said prospects were strong for markets in Manchester, Leeds, Liverpool and even Bristol.
“Markets combining relative affordability with strong employment and investment prospects are expected to outperform,” said Hill.
