| Savills expects mainstream UK house prices to fall by 2% across 2026, before returning to growth of 2.5% in 2027 | The outlook for mortgage rates remains uncertain – after easing earlier in the year, fixed mortgage rates are rising again | With the outlook still changeable, borrowers may benefit from taking advice rather than relying on forecasts |
As we move into autumn, the UK housing market remains relatively subdued. Higher borrowing costs and economic uncertainty continue to weigh on demand, while house prices have shown little movement. However, the market remains active, with buyers and sellers continuing to adjust to the current environment.
Prices remain broadly flat
Lloyds’ August House Price Index (formerly Halifax House Price Index) showed the average UK property price was £298,468, down 0.4% annually and 0.2% month-on-month. Lloyds also says prices overall were 0.2% higher than at the start of 2026. Prices have remained within a narrow range for almost two years, highlighting the impact of affordability pressures and higher borrowing costs.
Savills expects mainstream UK house prices to fall by 2% across 2026, before returning to growth of 2.5% in 2027. It expects the recovery to build as affordability improves and economic conditions become more supportive.
Mortgage rates remain uncertain
The outlook for mortgage rates remains uncertain. After easing earlier in the year, fixed mortgage rates began rising again in August and the trend continued into September. Changes in market expectations and swap rates have prompted several lenders to increase fixed rates.
The Bank of England held Bank Rate at 3.75 % in September, but mortgage rates do not necessarily move in line with Bank Rate. Market expectations, swap rates and lender competition can all influence the cost of fixed-rate borrowing.
New-build supply under pressure
While buyers continue to have a reasonable choice of existing properties, the supply of new homes remains a concern. Rightmove reports that the number of new-build developments coming to market is at its lowest level since January 2017. It says this highlights a shortage of homes in the right places and at affordable price points.
Looking ahead
The autumn market is likely to remain price-sensitive, with affordability continuing to influence decisions. Buyers may have opportunities to negotiate, while sellers will need realistic expectations. With the outlook still changeable, borrowers may benefit from taking advice rather than relying on forecasts about where rates will go next.
