Connells Group expects house price growth across Great Britain to stay modest through 2029, according to its latest house price forecast.
The research draws on a business that sold more than 100,000 homes in 2025 and projects annual rises of 1.0% in 2026, 1.5% in 2027, 2.5% in 2028 and 2.0% in 2029, as gradually easing borrowing costs give buyers more room in their budgets.
Higher-than-expected mortgage rates held back the recovery in home moves this year. The average rate paid by a homebuyer climbed from 4.14% at the start of 2026 to 5.22% in October, lifting monthly repayments on a typical property bought with a 75% loan-to-value mortgage over 25 years to £1,224. That compares with £1,115 a year earlier and £874 in 2019. Connells Group estimates transactions will finish around 100,000 lower than it expected at the start of the year.
“The pick-up in home moves many expected this year hasn’t materialised,” said Aneisha Beveridge, research director at Connells Group.
“Instead, transactions have fallen as higher mortgage rates squeezed buyers’ budgets and dented confidence, leaving activity around 100,000 below our expectations at the start of 2026. But fewer moves have not translated into widespread price falls. Wage growth has helped support household affordability, while inflation has done much of the heavy lifting by reducing house prices in real terms.”
House price forecast: real-terms falls do the work
The impact has fallen more on sales volumes than on prices. The latest ONS House Price Index, which underpins the forecast, shows the average price in Great Britain rose 0.8% year-on-year in August, down from 1.9% in August 2025. Connells Group expects prices to end 2026 1.0% higher than a year earlier, though performance varies considerably by region.
Wages are still growing, and there are few signs of large-scale job losses, which has helped households cope. Prices will rise more slowly than inflation for a fourth consecutive year in 2026, so much of the adjustment to higher borrowing costs has come in real terms rather than through sharp outright falls.
Over five years, consumer prices have risen 21.8%, against house price growth of 10.9% across Great Britain and 0.9% in London. Connells Group says this, together with continued wage growth, supports its forecast for modest price rises, assuming the economy avoids a recession and unemployment does not climb sharply.
Gradual recovery in 2027
Connells Group expects borrowing costs to ease gradually during 2027. Financial markets are pricing in four or five Bank Rate rises over the next year, while the forecast assumes no more than two increases over the next six months, on the view that a relatively weak economy and limited signs of spreading inflationary pressure should constrain further moves.
If market expectations for Bank Rate ease, swap rates, and, in turn, fixed mortgage rates should fall even if Bank Rate initially rises. Borrowing costs are still expected to stay above the levels seen for most of the 2010s, which will limit buyers’ budgets and price growth.
“Looking ahead, lower mortgage rates should gradually give more people the confidence and financial room to move,” Beveridge said. “But if rates remain around 5%, the risk of small house price falls in 2027, rather than growth, increases significantly.”
“By mid-2027, the final wave of households on cheap five-year fixes taken out before rates began to rise will be refinancing,” she added. “Higher repayments will still stretch budgets, but the refinancing shock that has weighed on confidence and activity should start to fade. We expect house price growth to build in 2027 and 2028, although mortgage repayments and moving costs will continue to hold some households back.”
Southern markets, where buyers need larger mortgages, should see the biggest lift from lower rates, helping demand and price growth pick up from a weaker starting point. Northern markets are expected to keep outperforming at a broadly similar pace to 2026, supported by better affordability.
London returns to growth, led by the outer boroughs
Greater London prices are forecast to rise 2.0% year-on-year in Q4 2027, following a 1.0% fall in Q4 2026, though the recovery will be uneven. Outer London leads the country with forecast growth of 3.0% after a 0.5% fall, because demand there is more closely tied to domestic owner-occupiers whose spending power should improve as mortgage rates ease.
Inner London is expected to see prices rise 0.5% after a 4.5% fall, with parts of prime central London around 30% below their level of 10 years ago in real terms. Tax concerns, particularly among international investors, are likely to hold back growth.
Higher ownership costs could also temper the recovery. Larger council tax bills in some boroughs may offset part of the benefit of lower mortgage rates, and buyers of homes worth £2 million or more will factor in the new ‘mansion tax’, due to take effect in April 2028. Uncertainty over a possible shift to an annual property or land tax adds to the caution. Depending on its design, such a change could leave around 75% of Londoners paying more each year than they pay in council tax now.
Years of weaker price growth have narrowed the gap with the rest of England. The average Greater London home now costs 1.89 times the England average, down from a 2016 peak of 2.31 times and back to 2011 levels, while Inner London’s premium has returned to levels last seen in 2009.
The group argues that better relative value alone is unlikely to repeat the capital’s post-2008 recovery, which rested on ultra-low interest rates, a strengthening London economy, strong international demand and more favourable tax treatment. Higher property taxes, weaker investor demand and fewer international buyers are holding back growth today, and those pressures are unlikely to ease significantly over the forecast period.
Inflation and election uncertainty shape 2028 and 2029
Inflation should sit close to the Bank of England’s target by 2028, creating more scope for rate cuts. Connells Group forecasts growth of 2.5% across Great Britain that year, the strongest of the forecast period, though it expects growth to stay modest rather than mark the start of another boom.
The North East and Scotland are both forecast to rise 4.0%. Prices there have increased 41% and 54% respectively since 2008, compared with 98% in London, which has kept these markets comparatively affordable. London and Southern England should also benefit from lower rates, but stretched affordability and higher property tax costs are expected to keep their recovery more subdued.
Growth is forecast to ease to 2.0% in 2029 as uncertainty ahead of the next general election tempers demand. Some households may wait for clarity on tax and spending plans before moving, particularly in London and Southern England, where higher property values leave buyers more exposed to potential tax changes. The possibility of a hung parliament adds to the uncertainty.
Over the four years from Q4 2025 to Q4 2029, prices are forecast to rise 7.2% across Great Britain, with the North East and Scotland leading at 13.1% and 12.5%. Both have seen the weakest price growth of the cycle that followed the 2008 financial crisis, with prices up just 39% and 50% since 2009. London is still expected to retain its lead over that longer period, ending 2029 some 103% above its 2009 level against 88% for Great Britain.
Transactions edge higher
Completions across Great Britain are expected to reach around 1.1 million in 2027, rise to just under 1.2 million in 2028 and ease back to around 1.1 million in 2029 as election uncertainty weighs on demand. The First Homes scheme, launching in April 2027, should give a small boost to completions in 2027 and 2028.
Connells Group data shows the number of homes going under offer has fallen less sharply than new buyer registrations this year. That suggests those with a stronger need to move are still buying, while more discretionary buyers have stepped back. Lower mortgage rates should encourage some of the latter to return.
Activity is unlikely to match the highs of 2021 or the period before the 2008 financial crisis. Borrowing costs remain above 2010s levels, and stamp duty adds a substantial upfront cost, which Connells Group expects to keep encouraging households to move less often.
“London should return to growth, particularly in Outer London, but higher taxes and weaker investor and international demand will constrain its recovery,” Beveridge noted.
“More affordable markets, including Scotland and the North East, are better placed to lead price growth. Government policy has supported first-time buyers and the lower end of the market, while stamp duty and other tax barriers will continue to weigh on the mainstream and prime markets.”
