Savills revises UK house price forecast as higher mortgage costs weigh on demand

The West Midlands property market remains one of the most dynamic and resilient regions in the UK, and recent insights from Savills shed new light on key trends shaping everything from house prices to rental demand. In this analysis, we’ll break down what these findings mean for homeowners, investors, and tenants across Birmingham, Coventry, Wolverhampton, and the wider region, connecting the data to real-world opportunities and considerations for anyone navigating the local property landscape.

At Kunda House, we stay closely aligned with the latest market intelligence to ensure our community has the information they need to make confident decisions. Whether you’re exploring a short stay in Birmingham, considering a long-term rental investment, or tracking price movements for your next home purchase, understanding the trends highlighted in this analysis will help you stay ahead of the curve.

Savills News Savills revises UK house price forecast as higher mortgage costs weigh on demand 01 June 2026 Article Contacts & Related Articles Average mainstream UK house prices are expected to fall by -2% in 2026, as higher mortgage rates reduce demand, according to property firm Savills’ revised mainstream housing forecast.

However, there remains good capacity for house price growth in the medium term, as economic prospects are expected to improve and the market becomes less constrained by affordability.

Savills forecasts 18.5% growth over the five-year period to 2030 (downgraded from previous forecast of 22.2%). 2026 2027 2028 2029 2030 5 years to 2030 UK house price growth -2.0% 2.5% 5.0% 6.0% 6.0% 18.5% CPI inflation 3.9% 1.9% 1.9% 2.0% 2.0% 12.2% Bank of England base rate (at year end) 3.75% 3.50% 3.00% 2.75% 2.50% - Assumed average mortgage rate (at year end) 4.78% 4.34% 3.98% 3.71% 3.50% - Real GDP growth 0.7% 0.7% 1.8% 1.7% 1.4% 6.5% Source: Savills using Oxford Economics, Bank of England Headwinds shift short-term outlook The conflict in Iran and the resultant rise in mortgage rates has fundamentally changed the outlook for the UK housing market, according to Savills.

A significant increase in inflation has meant that households are facing higher mortgage costs and reduced availability of debt.

As a result, Savills has revised its forecast for 2026 down from +2% to -2%. “Despite a robust start to the year for both price growth and activity, the rise in mortgage rates since late February has downgraded the short-term outlook.

Higher borrowing costs and weaker sentiment will weigh on demand through the remainder of 2026,” comments Lucian Cook, head of residential research at Savills. “At the same time, lower demand is being set against elevated levels of stock – partially from landlords selling up in the face of greater regulation, which will place downward pressure on prices, particularly across submarkets in London and the South East.” “However, several factors will cushion the impact of these headwinds.

Affordability is less stretched now, compared with 2022, following a slower recovery in prices.

While stricter mortgage regulation and the widespread use of fixed-rate mortgages continue to keep the risk of forced sales low.

Overall, this points to a modest adjustment in nominal house prices, with the greatest pressure likely to come over the summer as interest rates peak.” The main risk to this outlook is that a more protracted conflict in the Middle East leads to a sharper rise in inflation and, in turn, interest rates.

Savills expects this would result in a more significant short‑term pressure on house prices, followed by a more pronounced V‑shaped recovery.

Reasons for optimism in the medium term Savills expects the most significant pressure on prices to come over the summer when rates are expected to be at their highest.

The property firm expects recovery to begin slowly in 2027, before an improved outlook allows prices to grow more strongly over the remainder of the forecast period.

Over the five years to 2030 Savills expects average house prices to increase by 18.5% or £67,000.

North and devolved nations expected to outperform Savills forecasts the North of England, Scotland and Wales to outperform during the period of higher mortgage rates, reflecting their stronger affordability cushion.

Further South, Savills anticipates houses will outperform flats, amid continued caution from buyers around leasehold and building safety concerns. “Regional performance continues to be shaped by affordability.

More affordable markets tend to be more resilient when borrowing costs rise, and we expect that to underpin outperformance across parts of the North, Scotland and Wales while mortgage rates remain elevated,” comments Dan Hill, research analyst at Savills.

Region 2026 2027 2028 2029 2030 5 years to 2030 UK -2.0% 2.5% 5.0% 6.0% 6.0% 18.5% London -4.0% 1.0% 3.5% 5.0% 5.0% 10.6% South East -3.5% 1.5% 4.0% 5.5% 5.5% 13.4% East of England -3.5% 2.0% 4.0% 5.5% 5.5% 13.9% South West -2.5% 2.5% 5.0% 6.0% 6.0% 17.9% East Midlands -2.5% 3.0% 5.5% 6.0% 6.0% 19.0% West Midlands -2.0% 3.0% 5.5% 6.0% 6.0% 19.7% North East 0.0% 3.5% 6.0% 6.5% 6.0% 23.9% Yorks & Humber 0.0% 3.5% 6.5% 6.5% 6.5% 25.0% North West 0.0% 3.5% 6.5% 6.5% 6.5% 25.0% Wales -0.5% 3.0% 6.0% 6.5% 6.5% 23.2% Scotland -0.5% 3.0% 5.5% 6.5% 6.5% 22.6% Source: Savills Research < Back to news Recommended articles Read press release Read press release Read press release

Key Takeaways from This Analysis

• West Midlands revised forecast: -2.0% (2026), 3.0% (2027), 5.5% (2028), 6.0% (2029), 6.0% (2030)
• Total 19.7% 5-year growth

What This Means for the West Midlands

These findings reinforce the West Midlands’ position as a region of growing importance for UK property. Compared to London and the South East, where affordability remains a significant barrier for many, the West Midlands continues to offer better value while still delivering strong growth potential. Birmingham, in particular, benefits from ongoing regeneration projects, improved transport links, and a vibrant cultural scene that attracts young professionals, students, and families alike.

For investors, the combination of competitive entry prices and healthy rental yields makes the West Midlands an attractive choice. Meanwhile, first-time buyers and those looking to move up the ladder can find more space and better value compared to many other parts of the country. With major infrastructure projects continuing to shape the region, the long-term outlook remains positive for both homeowners and landlords.

How Kunda House Can Help

At Kunda House, we specialise in connecting people with quality accommodation across the West Midlands. Whether you’re looking for a flexible short stay, a comfortable long-term rental, or expert guidance on local property investment, our team is here to support you every step of the way. We combine local market expertise with a commitment to outstanding service, ensuring our residents, guests, and partners have the best possible experience.

Our properties are carefully selected and maintained to the highest standards, offering modern amenities and prime locations across Birmingham and the surrounding area. We also keep a close eye on market trends like those highlighted in this analysis, ensuring our offerings remain competitive and aligned with what our community needs.

Looking Ahead

As we move further into 2026, the West Midlands property market is expected to continue its steady evolution. While some fluctuations are inevitable, the underlying drivers of growth—including regeneration, infrastructure investment, and strong demand for quality rental accommodation—remain firmly in place. By staying informed and working with trusted local partners, you can navigate the market with confidence and make the most of the opportunities available.

If you’d like to learn more about the West Midlands property market, explore our available properties, or discuss your accommodation needs, don’t hesitate to get in touch with the Kunda House team today.