House prices will fall 1.5% next year and will not recover until 2028, estate agent Savills warns

Savills has warned that the Middle East conflict is keeping mortgage rates elevated for longer, prompting buyers to hold off and pushing prices down a further 1.5 per cent — around £5,500 — through 2027 before any recovery takes hold. Emily Williams, the estate agency's director of residential research, said the prolonged fighting has dimmed hopes of significant mortgage-rate relief, dampening market activity well into next year. The Bank of England is expected to lift its base rate to 4 per cent this Thursday, with mortgage deals unlikely to dip below 5 per cent before early 2028.

London is worst hit, with house prices in the capital set to grow just 8.1% over five years to 2031, against 23.3% in the North West.

Savills expects a total peak-to-trough decline of around 3% before prices begin recovering in the second half of 2028.

The North West, North East and Scotland are forecast to outperform, buoyed by relative affordability compared with London's eye-watering 11-times-salary average price.