The renowned real estate advisory firm Savills anticipates a 1.5 per cent decline in UK residential property prices next year. The agency cites ongoing geopolitical tensions and persistently high interest rates on property financing as the primary drivers of this subdued development.
Prospective buyers and homeowners in the United Kingdom must prepare for an extended period of expensive credit. Savills expects mortgage rates to remain above the 5 per cent mark until early 2028. These persistently high borrowing costs are weighing on home ownership affordability and noticeably dampening transaction momentum.
Moderate correction phase through to 2028
Despite the current cooling, the analysis does not point to an abrupt market collapse. Over the entire correction cycle, Savills forecasts a total peak-to-trough price decline of only around 3 per cent. The UK market is thus proving remarkably resilient despite the difficult macroeconomic environment.
- —Forecast price decline of 1.5 per cent for UK residential property next year
- —Mortgage rates expected to remain above 5 per cent until early 2028
- —Total peak-to-trough correction projected at around 3 per cent
- —Geopolitical uncertainties and high interest rates identified as key influencing factors
The combination of geopolitical uncertainty and tight financing conditions continues to shape the market landscape. As monthly repayments for borrowers remain high, buyers are acting with increasing selectivity and price sensitivity during negotiations. Vendors must adjust to longer marketing times and less scope on pricing.
Until a noticeable turnaround in interest rates takes place towards the end of the decade, the UK housing market is likely to remain in an extended consolidation phase. Market observers expect that while fundamental housing demand will remain intact, price growth will be constrained for the time being by restrictive lending conditions.
