Estate agents operating in prime housing markets face another difficult year, with Savills forecasting further price falls in 2027 before a gradual recovery takes hold.
The estate agency expects prime house prices to decline by as much as 3.5% in some locations next year, as elevated mortgage rates, higher taxes and economic uncertainty continue to weigh on demand.
Prime central London prices are forecast to fall by 2%, while outer prime London faces a steeper 2.5% decline. Across the prime regional markets, values are also expected to drop by 2%.
The outlook is particularly challenging for agents in London’s suburbs and commuter belts, where buyers remain sensitive to borrowing costs and weaker demand from those moving out of the capital.
Savills now expects most prime markets to return to growth in 2028. However, prime central London is not forecast to see price increases until 2029.
Savills warns prime housing recovery will take longer
Frances McDonald, director of residential research at Savills, said buyers and sellers continue to face difficult conditions.
“Owners and buyers of prime property continue to face a challenging combination of elevated borrowing costs, tax and political uncertainty, and heightened price sensitivity,” she said.
“As a result, recovery is likely to take longer than previously expected, with values remaining under pressure across most markets during 2027.
“But the prime markets are down, not out, and a medium- or long-term view is more relevant for prospective buyers.”
Savills expects lower mortgage rates and improving economic conditions to release pent-up demand from 2028 onwards.
However, the recovery will vary considerably between locations.
Its forecasts suggest prime regional values will rise by 11.9% over the five years to 2031, compared with 9.7% in outer prime London and 8.7% in prime central London.
Prime house price forecasts for 2027–2031
| Market | 2027 | 2028 | Five-year growth |
|---|---|---|---|
| Prime central London | -2.0% | 0.0% | +8.7% |
| Outer prime London | -2.5% | +2.0% | +9.7% |
| All prime regional | -2.0% | +2.0% | +11.9% |
| London suburbs | -3.5% | +1.5% | +7.5% |
| Inner commuter belt | -3.0% | +2.0% | +9.2% |
| Outer commuter belt | -2.5% | +2.0% | +9.7% |
| Midlands and North | -1.0% | +2.5% | +14.7% |
| Scotland | 0.0% | +3.0% | +17.0% |
| Wales | -1.0% | +3.0% | +15.3% |
Source: Savills Research. Forecasts relate to average second-hand property values, rather than new-build homes.
Prime central London agents face prolonged downturn
Prime central London is expected to experience one of the slowest recoveries.
Savills forecasts a further 2% fall in values during 2027, followed by no growth in 2028.
Prices are not expected to begin rising again until 2029, with gains of 3% forecast that year.
Higher ownership costs, particularly stamp duty, remain a major obstacle. Tax uncertainty and geopolitical concerns are also affecting buyer confidence.
McDonald said: “Following a significant period of repricing, prime central London offers compelling value relative to historic highs and equivalent global locations, attracting buyers where properties are priced sensibly.
“However, higher ownership costs, particularly stamp duty, mean the recovery is unlikely to become firmly established before 2029.”
She warned that demand would remain concentrated on the best properties, increasing the price gap between prime stock and less desirable homes.
London estate agents face toughest price falls
Agents operating in London’s suburbs could face the sharpest price reductions next year.
Savills forecasts a 3.5% decline in suburban prime values during 2027, followed by a modest 1.5% recovery in 2028.
Inner commuter markets are expected to fall by 3%, while outer commuter locations face a 2.5% decline.
Outer prime London prices are forecast to drop by 2.5% next year, although shortages of suitable family houses could prevent more substantial falls.
McDonald said uncertainty surrounding the High Value Council Tax Surcharge had increased price sensitivity at the top end of the market.
However, she expects family moves and other needs-driven purchases to continue supporting activity.
“As mortgage rates fall and the economy improves, pent-up demand should begin to return from 2028, with renewed wealth flows from central London supporting a more sustained recovery later in the forecast period,” she said.
Scotland and northern England set to outperform
The outlook is more positive for agents in Scotland, Wales and parts of northern England.
Scotland is the only prime market forecast to avoid price falls in 2027, with values expected to remain unchanged.
Savills predicts Scottish prime prices will then rise by 17% over the five years to 2031, despite the introduction of two new council tax bands for properties worth more than £1m from 2028.
Wales is forecast to record five-year growth of 15.3%, while the Midlands and North are expected to see increases of 14.7%.
By comparison, London’s suburban prime market is forecast to grow by just 7.5% over the same period.
Savills attributes the stronger regional outlook partly to relative affordability, demand and limited supply.
Sellers warned to be realistic on asking prices
For estate agents, the immediate challenge remains persuading sellers to adjust their expectations.
Savills expects demand to remain focused on the best-quality properties, particularly where supply is limited.
McDonald said stock shortages were emerging in parts of the prime regional market, especially at the very top end.
“That is likely to focus demand on the best properties and provide some support for pricing,” she said.
“However, buyers remain discerning, so vendors still need to take a pragmatic approach to pricing if they want to achieve a successful sale.”
The forecasts suggest agents in London and its commuter markets face another year of difficult pricing conversations, while those operating in Scotland and lower-value regional prime markets may see conditions improve sooner.
