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Property market 'past peak pain' but values still down 7% in 12 months

for sale sign savills

The UK’s housing market is past ‘peak pain’ after a rollercoaster 12 months and is forecast to grow by 17.9% – equivalent to a £45,521 gain on the average home – within five years.

Savills says mainstream house prices are expected to bottom out in 2024, falling by a modest -3% as borrowing cost pressures begin to ease in the second half of the year, when the Bank of England is expected to start cutting rates.

It expects a 4.75% base rate by year-end, giving more capacity for price growth in the mainstream market.

The agency also forecasts that annual house price falls will stand at -4% by the end of this year, which will leave values down -7% since autumn 2022.

Market cycle

The UK housing market remains in the late stages of a typical housing market cycle, suggesting slightly greater house prices falls in London and the South East in 2024 (where buyers continue to need bigger deposits and borrow more relative to their income) with the strongest overall price growth set to be in Wales and the North East over the next five years.

Cash buyers have remained the most resilient buyer group over the past year, says Savills, with activity 3.5% higher than the 2017-19 average. However, less activity among mortgaged buyers – most notably buy-to-let investors – means overall transactions are expected to end this year -20% down on 2022.

Lucian Cook (pictured), head of residential research at Savills, says: “The expectation of a gradual reduction in rates suggests a progressive restoration of buying power and steady recovery in demand.

"We expect growth to accelerate as affordability pressures ease, with the strongest growth forecast for 2027 when rates reach their long-term neutral level. From there, we expect growth to settle at a rate broadly in line with income growth.”


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