UK House Price Forecasts Point to a 2027 Dip, With Big Regional Differences

A modest UK-wide house price fall could mask a sharp divide between regions in 2027. Savills expects the average home value to drop 1.5%, or about £5,500, as mortgage costs continue to weigh on affordability. Its regional forecasts show prices rising in parts of the North, Scotland and Wales even as London and much of southern England decline.

The change marks a reversal from Savills’ June forecast, which anticipated 2.5% growth next year. The firm says higher inflation, linked in its outlook to the prolonged conflict in the Middle East, has delayed the prospect of meaningful mortgage rate relief. That could weaken buyer confidence and reduce the number of people able to afford a purchase.

What the national forecast assumes

Savills’ projections connect house prices with borrowing costs, inflation and economic growth. For 2027, it forecasts 2.4% consumer price inflation, a Bank of England base rate of 4.25% at year end and an assumed average mortgage rate of 5.09%. It also expects real GDP growth of 0.7% and nominal income growth of 2.2% that year.

For comparison, the forecast puts the average mortgage rate at 5.32% at the end of 2026, then 4.23% in 2028 and 4% in each of 2029, 2030 and 2031. The base rate is forecast at 3.25% at the end of 2028 and 3% at the end of each of the following three years. These are assumptions in a forecast, rather than a promise that rates will follow that path.

After the projected 2027 decline, Savills expects national prices to rise 3.5% in 2028, 5% in both 2029 and 2030, and 3% in 2031. Across the five years to 2031, its forecast adds up to 15.8% growth, equivalent to £56,500 for the average UK home. The predicted path is uneven: the 2027 dip comes before the stronger increases later in the period.

There are factors that could limit downward pressure. Savills residential research director Emily Williams says many homeowners have already adjusted to higher borrowing costs since late 2022, and relatively few still need to refinance directly from mortgage rates below 2%. The firm also describes the labour market as resilient. It expects these conditions to keep forced sales low, reducing one potential source of pressure on prices.

Regional forecasts diverge

The expected 1.5% national decline does not describe every local market. Savills forecasts 1% growth in Scotland, the North East and the North West in 2027, and 0.5% in Yorkshire and the Humber and Wales. It attributes the expected strength in these areas in part to comparatively affordable prices and employment prospects.

The projected falls are larger in parts of southern England: 3.5% in London, the South East and the East of England; 3% in the South West; and 2% in the East Midlands. The West Midlands is forecast to fall 1.5%, in line with the UK figure.

The longer view in Savills’ regional table also varies considerably. By 2031, it forecasts cumulative five-year growth of 23.3% in the North West and 22.2% in the North East. Scotland, Wales and Yorkshire and the Humber are each forecast to reach about 21% growth. London’s projected five-year rise is 8.1%, while the South East is at 9.1% and the East of England at 10.7%.

Local demand and the kind of home for sale may matter as much as the regional average. Savills research associate Dan Hill identifies Manchester, Leeds, Liverpool and Bristol among the cities expected to benefit from relative affordability, employment and investment prospects. Well-connected commuter areas that offer better value than nearby locations may also fare relatively well.

Hill expects houses to continue outperforming flats. Demand for larger family homes is supported by flexible working patterns and changing buyer demographics, while flats face affordability constraints, building safety concerns and greater supply. These are broad market factors; they don’t determine the value or sale prospects of any individual property.

Making a decision in a softer market

For buyers, a forecast is a useful planning input, but it cannot tell you what a particular home will sell for or when to buy. Affordability still depends on the purchase price, deposit, mortgage terms and household budget. A possible fall in prices may offer more negotiating room in some areas, while stronger demand could limit that in others.

Sellers may need to pay close attention to their asking price. Knight Frank London Private Office co-head Stuart Bailey describes the outlook as relatively balanced and says buyers and sellers should generally continue with plans they had already made. For owners of premium second homes in places such as London, selling sooner could release capital; waiting would leave them exposed to further price movements while they hold the property.

Bailey’s advice also highlights the difference between nominal prices and meaningful gains over time: an owner who has seen little growth may need to wait longer for a substantial increase. That’s a personal trade-off involving plans, costs and tolerance for uncertainty, rather than a decision that a national forecast can settle.

For households weighing a move, the practical takeaway is to compare local conditions with their own finances. Savills’ numbers suggest a difficult 2027 for several southern markets and a more supportive outlook across parts of the North, Scotland and Wales, followed by forecast growth across every listed region. Asking prices, mortgage affordability and the type of property remain key details to check as plans take shape.