Landlords hoping to offset weaker rental income through rising property values may have to wait several years for meaningful capital growth.
Connells Group, one of the UK’s largest estate and lettings agency groups, has published its latest housing market predictions, covering 2027 to 2029.
Its forecasts suggest that house price growth will remain modest over the next few years, despite expectations of gradually falling mortgage rates.
The key predictions include:
- House prices: Property values across Great Britain are expected to increase by 1% in 2026, followed by 1.5% in 2027, 2.5% in 2028 and 2% in 2029 as borrowing costs gradually fall.
- Fewer property transactions: The number of home sales in 2026 is expected to be around 100,000 below the level predicted at the start of the year.
- Mortgage affordability: Lower mortgage rates should encourage buyers who delayed moving to return to the market from 2027. However, borrowing costs are likely to remain higher than they were during much of the 2010s, restricting house price growth.
- London market: Prices in the capital are forecast to rise by 2% in 2027, following an expected 1% decline in 2026. Improving mortgage affordability could support Outer London, but higher taxes and weaker demand from investors and overseas buyers may slow the recovery.
- Growth expected to peak in 2028: House price increases are predicted to reach 2.5% across Great Britain and London in 2028. Falling inflation could allow borrowing costs to ease, helping to improve buyer demand.
- Regional differences: Scotland and the North East are expected to remain among the strongest-performing areas. Having experienced more limited price growth since 2008, these regions remain relatively affordable, potentially allowing more buyers to enter the market as mortgage rates fall.
- Slower growth in 2029: Annual house price growth is expected to ease to 2% in 2029. Uncertainty ahead of the next general election could affect buyer confidence, particularly in London and Southern England, where purchasers may be more concerned about possible property tax changes.
- Property transactions: Home moves are expected to recover gradually from 2027 as lower mortgage rates encourage postponed buyers to return. Completions are forecast to reach around 1.1 million in 2027 and just under 1.2 million in 2028, before falling back to approximately 1.1 million in 2029.
Mortgage Rates and Buyer Confidence Affect Market Activity
Aneisha Beveridge, research director at Connells Group, said the expected recovery in property transactions had failed to materialise during 2026.
Instead, higher mortgage rates have reduced buyers’ spending power and weakened confidence, leaving activity around 100,000 transactions below the group’s original forecast for the year.
However, the slowdown in sales has not resulted in widespread house price falls. Ms Beveridge explained that wage growth has helped households manage affordability, while inflation has reduced property values in real terms.
Connells Group has not yet released any forecasts for rental prices in 2027 or beyond.
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