Savills Forecasts Further House Price Falls in 2027 as Recovery Slips to 2028

Britain’s housing market could face another year of falling prices before a recovery takes hold in the second half of 2028, according to Savills’ latest residential forecast.

The property firm expects UK prices to fall by 1.5% in 2027, following a broadly flat 2026. London, the South East and East of England face a sharper projected decline of 3.5% next year, as expensive housing and persistent mortgage costs constrain buyers’ budgets.

Published on 4 November, the outlook pushes a meaningful recovery further into the distance for households hoping that cheaper borrowing will make their next move easier. Savills still expects national prices to rise by 15.8% over the five years to 2031, but much of that improvement comes later in the period.

For buyers and sellers, the immediate issue is how to make a transaction work during the intervening months. A more negotiable purchase price can be valuable. The benefit becomes less clear when the home being sold also attracts a lower offer, or the mortgage valuation leaves a larger cash contribution to find.

Why Savills expects the pressure to last

Higher borrowing costs remain central to the forecast. Savills links the delayed recovery to the prolonged Middle East conflict, its effect on inflation and the resulting pressure on mortgage rates and confidence.

A buyer can want to move and have a substantial deposit, yet find that the monthly cost of the required mortgage stretches the household budget too far. When enough buyers reach that point, sellers face a smaller pool of people able to meet their price.

Savills nevertheless expects a restrained decline rather than a severe correction. Its assessment points to resilient employment and the fact that many homeowners have already adjusted to higher mortgage costs since 2022, reducing the pressure for forced sales.

That combination can produce a frustrating market: fewer buyers able to stretch, but many sellers still able to wait. Transactions then depend heavily on realistic pricing, the circumstances of each household and the finance available to bridge the difference.

The recovery comes later in the five-year forecast

The sequence matters more than the final percentage alone. A household needing to sell next spring faces a different decision from someone buying a home they expect to occupy for ten years.

It also explains why the projected 2028 recovery can sit alongside a weak outlook now. Savills expects improving economic conditions and mortgage affordability to support demand later. Whether that happens on schedule depends on how those conditions develop.

London faces a different affordability challenge

The regional picture is uneven. The Times’ coverage reports projected 2027 falls of 3.5% across London, the South East and East of England, while several northern markets and Scotland are expected to record modest growth.

City AM reports that Savills expects London prices to grow by 8.1% over the five years to 2031, well below the national figure. High property values relative to earnings help explain the capital’s more constrained outlook.

For a buyer arranging a large mortgage, a relatively small percentage movement can represent a substantial cash sum. But the London forecast covers the mainstream regional market. It should not be applied mechanically to a particular prime address, family house or flat.

The property itself remains decisive. Condition, location, competing stock and the seller’s circumstances all influence a negotiation. A regional forecast can frame the discussion; comparable local sales and the lender’s valuation determine much more about the actual purchase.

A lower valuation can change the cash needed to complete

Consider a hypothetical £1 million purchase supported by a £750,000 mortgage. At an accepted £1 million valuation, the loan represents 75% of the property’s value and the buyer contributes £250,000 towards the price.

If the lender instead values the home at £965,000, a mortgage restricted to 75% of that valuation would fall to £723,750. With the price unchanged, the buyer would need £276,250, an additional £26,250, before fees and taxes.

This is an illustration of valuation sensitivity, not a prediction that the property will lose 3.5%. It shows why a buyer can negotiate a purchase they consider attractive and still encounter a funding gap.

The possible responses include revisiting the agreed price, contributing more cash or assessing a suitable product with a different LTV limit. Each changes the overall transaction. Extra cash may be available, but using it could reduce reserves intended for renovation, business commitments or other plans.

Home movers need to negotiate both sides of the move

For an existing owner, the discount secured on the next home is only half the calculation. What matters is the difference between the two transactions, together with the mortgage balance and moving costs.

Suppose a household expected to sell for £600,000 and buy for £900,000. If the sale eventually achieves £580,000 and the purchase is agreed at £875,000, the gap falls from £300,000 to £295,000. The £25,000 purchase reduction improves the price difference by only £5,000 because the sale proceeds are also lower.

The result could be better or worse where the two properties sit in different local markets. A London seller buying in an area with firmer demand cannot assume that both prices will move together.

For agents and buying advisers, an updated financing position can therefore make a negotiation more productive. Knowing the buyer’s workable budget and the seller’s realistic net proceeds is more useful than relying on figures established several months earlier.

The mortgage decision has its own timetable

A forecast stretching to 2031 does little to change a fixed-rate expiry next spring or a purchase that needs to complete this winter. Those deadlines require a decision based on the options available for the household.

As Willow’s earlier analysis of affordability and selected rate cuts explained, individual mortgage products can improve while the wider market remains under pressure. The relevant comparison is the borrowing available for the proposed transaction.

Movers with an existing mortgage should also establish whether their deal can be ported. MoneyHelper’s guidance explains that porting still involves lender checks, and additional borrowing normally needs a separate deal. Keeping an attractive existing rate may help, but the cost of any extra borrowing belongs in the same calculation.

For company directors, self-employed buyers and households with variable earnings, the income assessment can be just as influential. A negotiated price only becomes a workable purchase when the lender can support the required borrowing.

What an extended slowdown means for a purchase today

Waiting can provide time to save or search more widely, but it also has costs. Rent, the suitability of the current home and changes in personal circumstances continue while the market finds its direction.

A purchase that depends on a quick rebound in values leaves little room for disappointment. A home that suits the buyer’s longer-term needs, with manageable payments and adequate reserves, can be assessed on a broader basis.

Savills’ forecast gives buyers and movers a reason to revisit their figures. Willow can help establish how the sale proceeds, deposit, income and available mortgage terms fit together before a household commits to its next home.