Savills: House Prices to Dip in 2026 Before £56,500 Rise by 2031

Savills has forecast that UK house prices will fall next year before recovering to climb by an average of £56,500 by 2031, as This is Money reported. The prediction, coming from one of the country's most closely watched property consultancies, signals a market that is entering a period of short-term correction followed by a longer, more sustained recovery phase. For an industry that has spent the past two years grappling with higher borrowing costs and subdued transaction volumes, this forecast offers both a warning and a reassurance in equal measure.

For UK property investors, the significance of this forecast lies less in the headline figure and more in the shape of the trajectory it implies. A dip followed by a multi-year climb suggests that Savills sees current pricing as not yet fully adjusted to prevailing economic conditions, even as it retains confidence in the underlying strength of UK housing demand over the medium term. Investors who have been sitting on the sidelines waiting for a clearer entry point may now have a timeframe against which to plan acquisitions, while those already holding stock will need to weather a further period of softness before values move decisively upward.

The implications differ sharply depending on where in the country an investor is active. In high-value markets such as London and Surrey, where affordability constraints have weighed most heavily on buyer activity, a near-term fall could extend an already prolonged period of price stagnation. By contrast, regional cities including Manchester, Birmingham, Leeds, Liverpool and Newcastle, which have generally shown greater resilience and stronger yield profiles throughout recent volatility, may be better placed to absorb a short-term dip without the same degree of disruption to investor sentiment. PropertyNews analysis suggests that the gap between southern England's more expensive, slower-moving markets and the northern cities' comparatively affordable, higher-yielding ones is likely to remain a defining feature of the market as this forecast plays out.

Buy-to-let landlords face a particularly delicate calculation. A forecast fall in prices next year could initially appear to undermine capital growth prospects, yet landlords focused on rental income rather than short-term appreciation may find the dip creates opportunities to acquire stock at more favourable prices ahead of the longer recovery Savills anticipates through to 2031. First-time buyers, meanwhile, stand to benefit most directly from any near-term softening, provided mortgage affordability does not deteriorate further in the interim. A temporary fall in prices combined with even modest wage growth could marginally improve deposit-to-income ratios for those trying to get onto the ladder, a group that has been squeezed hard in recent years.

Developers and commercial investors will likely interpret the Savills forecast as a signal to recalibrate delivery timelines rather than abandon pipelines altogether. A dip next year followed by sustained growth to 2031 suggests that schemes brought to market in the next twelve months may face tighter margins, while those timed for completion further out could benefit from the stronger pricing environment Savills expects to emerge later in the decade. This dynamic places a premium on patient capital and phased development strategies, rewarding those with the balance sheet strength to hold through a period of softer demand rather than those forced to sell into a falling market.

Looking ahead to the next six to twelve months, PropertyNews analysis expects transaction volumes to remain cautious as buyers and sellers digest the prospect of a near-term price fall, with activity likely to pick up only once there is clearer evidence that the anticipated recovery is taking hold. The Savills forecast effectively asks market participants to take a longer view of value creation in UK housing, one that looks past a difficult 2025/26 period towards a more substantial uplift by the end of the decade. Investors who can afford to adopt that longer horizon, rather than reacting to short-term volatility, are the ones best positioned to benefit from the £56,500 average gain Savills believes lies ahead.