Connells expects house prices to rise 1.5% in 2027 and Inner London to fall 4.5% this year

Average house prices in Great Britain will rise by 1.5% in 2027, according to a forecast from Connells Group published on Monday, a modest pick-up from the 1% the estate agency group expects for this year.

Connells sees growth peaking at 2.5% in 2028, as inflation nears the Bank of England's target and borrowing costs ease, before slowing to 2% in 2029. It expects uncertainty before the next general election to weigh on demand that year.

London is the weak spot this year. Connells expects prices in the capital to fall 1% in 2026 and rise 2% in 2027. Inner London is forecast to drop 4.5% this year and edge up 0.5% next year, while Outer London slips 0.5% before rising 3%. Connells said higher taxes and softer demand from investors and overseas buyers would limit the capital's recovery, with Outer London leading it. Scotland and the North East are expected to be among the strongest areas, with growth of 4% in 2028 in both.

Mortgage costs

The forecast rests on mortgage rates coming down slowly. Connells said the average rate paid by homebuyers climbed from 4.14% at the start of 2026 to 5.22% in October. Monthly repayments on a typical 25-year mortgage at 75% loan to value are now £1,224, against £1,115 a year earlier and £874 in 2019.

Connells said that if rates stay around 5%, small price falls in 2027 become a much bigger risk than growth. It added that households coming off cheap five-year fixed deals face higher payments as they refinance, a wave it expects to end by the middle of 2027.

Higher rates have also held back moving. Connells estimates there will be about 100,000 fewer sales this year than it expected at the start of the year. It forecasts completions of about 1.1 million in 2027, just under 1.2 million in 2028 and about 1.1 million in 2029.

The Bank of England announces its next interest rate decision on Thursday 5 November.