Leading property consultancy Savills has significantly revised its long-term outlook for the UK housing market, now forecasting that mainstream house prices will increase by 18.5% by 2030. This represents a notable downgrade from their previous projection of 22.2% growth over the same period. The adjustment reflects ongoing challenges within the market, primarily driven by persistently high mortgage costs which are dampening buyer enthusiasm and impacting affordability across the country.
A key factor in this revised forecast is the expectation of a dip in house prices in the near future. Savills now anticipates a 2% decline in mainstream UK house prices during 2026. This projected contraction underscores the impact of the current economic environment, where higher interest rates translate directly into more expensive mortgage repayments, making homeownership less accessible for many potential buyers. This trend is likely to affect various regions differently, with areas more reliant on mortgage-dependent buyers potentially seeing greater adjustments.
For first-time buyers, the implications are mixed. While a projected price decline in 2026 might offer a brief window of opportunity for slightly more affordable entry into the market, the overarching challenge of elevated mortgage rates remains. The cost of borrowing continues to be a significant hurdle, potentially offsetting any modest price reductions. Government schemes such as Help to Buy, which concluded for new applications in October 2022, are no longer available to support new buyers, leaving a gap in affordability assistance.
Existing homeowners and landlords will also feel the effects of this revised outlook. Those looking to move or remortgage may find themselves facing higher monthly payments or a slower appreciation of their property's value than previously hoped. Landlords, particularly those with buy-to-let mortgages, could see their margins squeezed by increased borrowing costs, potentially influencing rental prices or investment decisions. The Stamp Duty Land Tax thresholds, adjusted in September 2022, currently provide some relief for buyers but the overall market sentiment remains cautious.
The long-term forecast, despite the downgrade, still indicates positive growth in property values over the next six years. However, the slower pace suggests a more restrained market than seen in recent buoyant periods. This more conservative outlook from Savills highlights a recalibration of expectations across the property sector, moving away from the rapid price escalations experienced in previous years towards a more moderate and sustainable growth trajectory, albeit with a temporary dip in the middle.