House prices to increase by 22.2% over the next five years: Savills

Average house prices are set to increase by £80,000 over the next five years, according to the latest house price forecast by property firm Savills.

The five-year mainstream house price forecast expects average house prices to increase by 2% in 2026 (previously 4%) and by 22.2% by the end of the five years to 2030.  

Weaker sentiment and concerns about the economy and tax environment have left the housing market subdued over 2025, with Savills predicting that both demand and price growth will be fairly slow for the rest of this year and into early 2026 as well.

Over the longer term, while the pace of interest rate cuts is slower than expected, they will still play a role in boosting demand and driving price growth over the next five years, says Savills.

Further cuts will be supported by the relaxation of mortgage rules earlier this year, allowing some buyers to borrow more relative to their incomes. Beyond 2026, the UK economy is also expected to be materially stronger, with low inflation, rising GDP growth, falling unemployment, and an undersupply of new homes which will maintain upwards pressure on real prices.

Savills expects house prices to rise by 22.2% in the next five years, peaking in 2028 and 2029 at 5.0% and 5.5%, respectively.

Importantly, values will grow in real terms from 2028, for the first time since the end of 2022.   

First-time buyers to drive market activity

Transaction volumes are expected to dip in 2026, following this year’s boost from stamp duty changes. But over the next five years, increased affordability is expected to drive transaction volumes close to the pre-pandemic average. 

First-time buyers' purchasing power has improved the most, remaining the only buyer group with activity significantly above pre-Covid levels.

For second steppers, slower price growth for flats is limiting their ability to build equity to move up the ladder in the short term, but as rates fall, mortgaged home movers should trend up.

Meanwhile, buy-to-let transactional activity has been sustained by smaller landlords selling up to larger ones. This is expected to ramp up once the Renters Rights Bill becomes law, supported by lower rates and higher rents, although tighter regulation and taxation will limit growth of this sector. 

Regional variation across the mainstream market

The pandemic-driven disruption which largely drove regional growth over the past five years has now largely worked its way through the system. Savills’ forecast now anticipates that affordability will once again become the key influence on house price performance. 

More affordable regions have proved most resilient in 2025. By the end of Savills forecast period, values in the North West are expected to sit just 15% below the UK average, narrowing from nearly 30% a decade earlier. Meanwhile, London prices are set to be 33% above the average – down from 70% in 2017, laying the groundwork for renewed outperformance in the 2030s.

Lucian Cook, head of residential research at Savills, commented: “Our previous forecast assumed falling interest rates would boost borrowing and investment, supporting house price growth. However, with inflation stuck at 3.8%, economists are less confident about the pace in which rate cuts will happen. Higher interest and mortgage rates next year, as well a weaker labour market, with a slight rise in unemployment and slowing wage growth, are likely to constrain price growth.

“The upcoming Budget also continues to weigh on the market, although we expect any announcements to have a much greater impact on prime values and transactions than the mainstream market. Direct changes to transactional taxes could alter the incentives that currently shape buyers’ housing decisions, while broader tax increases on certain population segments could reduce some prospective buyers’ capacity to finance home purchases. Ultimately, however, the biggest influence on the mainstream market will come from how financial markets react to the Budget itself.” 

Dan Hill, research analyst at Savills, added: “Regional performance is largely influenced by where we are in the housing market cycle. Since 2016, we’ve been in the second half of the cycle, where the more affordable regions in the North and Scotland outperform the UK average, and capacity for growth in London and the South is more limited.

“In the absence of any whole market price correction, this pattern is likely to persist for the next five years, with the strongest growth shifting to late-stage markets in the North East, Scotland & Wales.”