UK House Prices Face 2.5% Growth or Falls in 2026 as Mortgage Rates Top 5.5%
Updated
Updated · inews · Jun 9
UK House Prices Face 2.5% Growth or Falls in 2026 as Mortgage Rates Top 5.5%
2 articles · Updated · inews · Jun 9
Summary
UK house prices are expected to rise more slowly than 2.8% inflation in 2026, with some forecasters now predicting outright declines after spring mortgage-rate increases.
Mortgage costs have climbed above 5.5% on average since the Middle East war intensified; two-year fixes stand at 5.65% and five-year deals at 5.61%, squeezing borrowing power and demand.
Hamptons still sees 2.5% growth and says needs-based buyers should prevent broad national falls, but Savills says higher borrowing costs, weaker sentiment and heavy supply could push prices down, especially in London and the South East.
Forecasters are more upbeat on 2027, with Pantheon Macroeconomics and Knight Frank both projecting 3% growth if the Bank of England cuts rates from 3.75% and mortgage costs ease.
That outlook remains highly uncertain because it depends on whether Middle East tensions cool and how the UK government responds, including possible tax changes and political uncertainty later this year.