House price growth to remain modest

Landlords planning a sale face another year of modest house price growth, with higher mortgage costs having delayed an estimated 100,000 transactions in 2026.

Connells Group forecasts that prices across Great Britain will rise by 1% this year and 1.5% in 2027 as borrowing costs gradually ease.

However, its forecast assumes mortgage rates will fall, with rates remaining around 5% significantly increasing the risk of small price falls next year.

The average mortgage rate paid by a homebuyer reached 5.22% in October, having stood at 4.14% at the start of 2026.

Mortgage costs delay sales

Aneisha Beveridge, Connells‘ research director, said: “The pick-up in home moves many expected this year hasn’t materialised.

“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.”

She added: “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.”

London prices recover slowly

London house prices are forecast to rise by 2% in 2027 after falling by 1% this year, although higher taxes and weaker investor and international demand are expected to restrict the recovery.

Outer London is tipped to lead that improvement as lower mortgage costs increase domestic owner-occupiers’ spending power.

For Inner London, the forecast is for growth of just 0.5% next year, following a projected 4.5% fall in 2026.

Meanwhile, Scotland and the North East are both expected to record price rises of 4% in 2028, with more limited growth since the financial crisis having kept homes comparatively affordable.

Home moves pick up

Across Great Britain, annual house price growth is forecast to reach 2.5% in 2028 before easing to 2% in 2029 as uncertainty ahead of the next general election tempers demand.

Completions are expected to recover to around 1.1 million in 2027, then approach 1.2 million the following year as some buyers revive postponed moves.

By mid-2027, the last cheap five-year mortgage deals taken out before rates began rising in 2022 will be ending, after which fewer households should face a sudden increase in repayments.

However, borrowing costs above those seen during much of the 2010s, alongside stamp duty, are expected to keep households moving less often.