UK housing market recovery delayed until 2028, Savills predicts

The British housing market is unlikely to see a significant recovery until 2028, according to forecasts from property firm Savills. The company expects average house prices to drift lower through the remainder of 2026 and fall by 1.5% in 2027. This downturn is attributed to prolonged conflict in the Middle East, which is expected to keep mortgage rates higher for longer and undermine buyer confidence.

Despite the projected decline, Savills does not anticipate a sharp market correction. The firm notes that most homeowners have already absorbed higher borrowing costs since late 2022 and the labor market remains resilient, which should keep forced sales low. Average mortgage rates are not expected to drop below 5% until early 2028.

Looking further ahead, Savills forecasts a recovery starting in the second half of 2028, with house prices projected to rise by 15.8%, or an average of £56,500, over the five years leading to 2031. First-time buyers are expected to lead this recovery, potentially overtaking cash buyers as the largest buyer group by 2029.