Savills says UK housing recovery delayed until 2028 by mortgage rates
Property firm Savills expects British house prices to drift lower through 2026 and fall 1.5 per cent in 2027, with values not recovering until the second half of 2028 as higher mortgage rates linked to the Middle East conflict deter buyers.
Britain's housing market is not expected to recover until 2028, according to a forecast from the property firm Savills, which says higher mortgage rates are holding back buyers and weighing on prices. The firm expects average values across Britain to start recovering from the second half of 2028, pushing back earlier hopes of a rebound.
Savills said average house prices were likely to drift lower during the rest of 2026 and fall by 1.5 per cent in 2027. The firm linked the pressure to mortgage rates that are expected to stay higher for longer, a trend it attributes to the war in the Middle East. The prolonged conflict, it said, is undermining buyers' confidence and keeping borrowing costs elevated.
The forecast describes a market that has yet to find firm footing. Higher borrowing costs make home purchases more expensive for households, which reduces the number of buyers able to commit and gives sellers less room to hold their asking prices. In Savills' outlook, activity and prices both remain under pressure until financing conditions ease.
Reports on the forecast say the expected delay applies across Britain, including Wales and Scotland, and that the firm's central expectation is a gradual turn in values from the second half of 2028. The timing is a significant shift from earlier expectations that a recovery would arrive sooner, and it leaves homeowners and prospective buyers facing a period of subdued prices and cautious lending.
The downgrade matters for households with mortgages due for renewal, who face higher repayments at a time when wage growth and household budgets are already stretched. For first-time buyers, who are most sensitive to borrowing costs and deposit requirements, a longer wait for stabilising prices may mean delaying purchases. Estate agents and lenders are likely to feel the effect as transaction volumes stay low and the flow of new mortgage approvals slows.
The Savills forecast also underlines how a conflict far from Britain can feed into domestic property markets. Lenders price fixed-rate mortgages largely on the cost of money in wholesale markets, so uncertainty abroad that keeps interest rate expectations high is passed on to borrowers at home. That transmission explains why a war in the Middle East is being cited in a British housing outlook, and why the recovery depends as much on global conditions as on domestic demand.
Source: manchestereveningnews.co.uk
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