House prices are set to stagnate across the UK until after the next general election, according to Savills’ latest five-year forecast, which says demand remains subdued amid rising borrowing costs and pre-Budget uncertainty.

Average UK house prices are forecast to rise by just 1% this year and 2% in 2026, half the growth previously predicted. Adjusted for inflation, values are not expected to increase in real terms until 2028.

Higher interest and mortgage rates next year, as well as a weaker labour market, with a slight rise in unemployment and slowing wage growth, are likely to constrain price growth.”

Lucian Cook, head of residential research at Savills, says: “Higher interest and mortgage rates next year, as well as a weaker labour market, with a slight rise in unemployment and slowing wage growth, are likely to constrain price growth.”

He adds that with inflation stuck at 3.8%, economists are “less confident about the pace of rate cuts”, limiting any near-term boost to affordability.

Cautious buyers

Emily Williams, Director of Research at Savills, says speculation around the Autumn Budget “continues to make buyers cautious”.

London and the South East are expected to see the weakest performance, with no growth for London in 2026 and just 1% in the South East. By contrast, more affordable regions such as Yorkshire, the North East, Scotland and Wales are forecast to rise by around 27–29% by 2030.

Beyond 2026, Savills expects the UK economy to be “materially stronger”, supported by lower inflation, rising GDP and an undersupply of new homes. Until then, however, it warns that transaction levels will remain subdued as high borrowing costs and Budget uncertainty continue to weigh on confidence.

While the firm forecasts nominal price growth of 22.2% by 2030, most of that uplift will come in the late 2020s as interest rates fall and sentiment recovers.