Landlords hoping to make up for limited rental income through rising property values may have to wait several years, as new forecasts suggest house price growth across the UK will remain modest.
Connells Group, one of the UK’s largest estate and lettings agency groups, has published its latest housing market predictions for 2027 and beyond.
Its forecasts indicate that house prices across Great Britain will increase by just 1% in 2026, followed by 1.5% in 2027. Growth is expected to reach 2.5% in 2028 before easing to 2% in 2029 as borrowing costs gradually fall.
The group also expects around 100,000 fewer property transactions in 2026 than it had predicted at the beginning of the year.
Lower mortgage rates should encourage some buyers who delayed their moving plans to return to the market from 2027. However, borrowing costs are still expected to remain higher than they were for much of the 2010s, which could restrict house price growth.
London market faces a slower recovery
London property prices are forecast to rise by 2% in 2027, following an expected 1% decline in 2026.
Improving mortgage affordability could help support demand in outer London. However, higher taxes and weaker interest from property investors and overseas buyers are likely to limit the capital’s recovery.
House price growth is expected to reach its highest level in 2028, with both Great Britain and London forecast to record growth of 2.5%. Falling inflation could allow borrowing costs to come down, helping to improve buyer demand across the market.
Scotland and the North East are expected to remain among the strongest-performing regions. House prices in these areas have risen less sharply since 2008, leaving them more affordable than many other parts of the country. This could give buyers greater scope to enter the market as mortgage rates ease.
By 2029, annual house price growth is expected to slow to 2%. Uncertainty surrounding the next general election could affect buyer confidence, particularly in London and Southern England, where potential property tax changes may have a greater influence on purchasing decisions.
Property transactions expected to recover
Connells Group expects housing market activity to improve from 2027 as lower mortgage rates encourage buyers who previously postponed their moves to return.
The number of completed property transactions is forecast to reach around 1.1 million in 2027, increasing to just under 1.2 million in 2028. Activity is then expected to fall back to approximately 1.1 million in 2029, which is due to be an election year.
Aneisha Beveridge, research director at Connells Group, said the expected increase in home moves had failed to materialise in 2026.
She explained that higher mortgage rates had put pressure on buyers’ budgets and weakened confidence, leaving transaction levels around 100,000 below the group’s original forecast.
However, the lower number of property sales has not resulted in widespread house price falls. Beveridge said wage growth had helped maintain affordability, while inflation had reduced property values in real terms.
Connells Group has not yet released any forecasts for rental growth in 2027 or beyond.
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