House Prices Are Falling Across the UK in 2026. These Regions Are the Exception

House Prices Are Falling Across the UK in 2026. These Regions Are the Exception

Key Takeaways

• 0% Decline in the North West: While the UK average drops 2% and London falls 4%, the North West holds completely flat in 2026 — the strongest resilience of any English region.
   
• 25% Growth by 2030: The North West is forecast to deliver 25% cumulative house price growth over five years, more than double London’s 10.6%.
   
• Summer 2026 Entry Window: Pricing pressure peaks over the summer as mortgage rates hit their highest point. Investors who enter now position themselves ahead of the forecasted recovery from 2028.
   
• Rates Will Fall: Average mortgage rates are expected to decline from 4.78% in 2026 to 3.50% by 2030, gradually unlocking stronger demand and faster price growth.

1. The UK Housing Market in Mid-2026: A Detailed Snapshot

The year started strongly. House prices rose 2.0% in the first four months of 2026, according to Nationwide. Activity levels were healthy, mortgage approvals steady, and the market appeared to be building momentum after a sluggish 2025.

That changed quickly. A deteriorating geopolitical backdrop has shifted economic forecasts, and the housing market is adjusting. The table below shows how underlying economic assumptions have moved since Savills’ previous forecast in November 2025:
 

Source: Savills Research using Oxford Economics and Bank of England data.

The picture is clear: higher inflation, higher mortgage rates, weaker GDP growth, and rising unemployment. The RICS survey recorded a net balance of -37 for new buyer enquiries in March and April, compared to -24 in the preceding six months. Agreed sales were down 4% in April according to TwentyCI.

Quick FAQ:

    Q: Will UK house prices crash in 2026?
    A: No. Savills forecasts a modest 2% nominal decline — not a crash. Affordability is less stretched than in 2022, fixed-rate mortgages protect existing borrowers, and strict lending regulation keeps the risk of forced sales low.

2. What Is Driving the Correction? Reasons Explained

The correction traces back to a single external catalyst: the conflict in Iran. Rising energy prices have pushed inflation expectations to 3.9% for 2026, up sharply from the 2.6% forecast in November 2025. The Bank of England base rate is now expected to hold at 3.75% until late 2027 — longer than previously anticipated.

Average mortgage rates have climbed to an assumed 4.78%, up 63 basis points from the 4.15% projected just seven months ago. That jump has cooled buyer sentiment and thinned transaction volumes, particularly in southern England where prices are already stretched.

But Savills is careful to frame this as a temporary adjustment, not a structural downturn. The central outlook from Oxford Economics expects energy markets to ease by the end of June 2026. Affordability is less stretched than during the 2022 rate shock. And the widespread use of fixed-rate mortgages means existing borrowers are protected — the risk of forced sales remains low.
 

3. Which Regions Are Showing Resilience?

Not all regions are affected equally. Savills’ regional forecasts reveal a clear north-south divide:

Source: Savills Research, published June 2026. Forecasts apply to the second-hand market; new-build values may not move at the same rate.

Three regions stand out: the North West, Yorkshire & Humber, and the North East — all forecast at 0.0% in 2026. Wales and Scotland are close behind at just -0.5%. Meanwhile, London absorbs the heaviest correction at -4.0%, followed by the South East and East of England at -3.5%.

The reason is affordability. Northern markets entered 2026 without the inflated valuations that make southern England more sensitive to rate rises. Lower average prices mean mortgage rate increases have a proportionally smaller impact on monthly repayments. Demand fundamentals — population growth, rental shortages, regeneration investment — remain intact.

Within the North West, Manchester sits at the centre of this resilience. The city’s £38 billion regeneration programme continues to drive housing demand, while Liverpool’s £2 billion Pumpfields regeneration and £5.5 billion Liverpool Waters scheme are creating similar momentum on the western edge of the region.
 

4. The Five-Year Outlook: Our View

Savills forecasts 25% cumulative growth for the North West and Yorkshire by 2030 — more than double London’s 10.6%. The gap is 14.4 percentage points over five years. That is not a marginal difference; it represents a fundamentally different return profile for investors.

At Rothmore, we believe the northern recovery could be even stronger than these headline figures suggest. Three structural factors are working in the North West’s favour beyond what the forecast captures:

Rental supply is tightening. Savills notes that elevated stock on the market is partly driven by landlords exiting due to greater rental regulation. That simultaneously reduces rental supply and pushes rents higher — strengthening yields for investors who stay or enter.

Mortgage rates are falling from 2027. The Bank of England base rate is forecast to decline from 3.75% to 2.50% by 2030, with average mortgage rates following from 4.78% to 3.50%. Each rate cut unlocks a fresh wave of buyer demand. For a deeper analysis of the current rate environment, see: Bank of England Holds at 3.75%: What It Means for Property Investors.

Regeneration pipelines are still accelerating. Manchester’s £38 billion programme and Liverpool’s Pumpfields and Liverpool Waters schemes are multi-decade commitments that will continue to drive population growth, employment, and housing demand regardless of short-term rate cycles.

For more on Manchester’s investment fundamentals, see: Manchester Property Market 2026: Price Forecast, Rental Yields & Development Drivers.

5. What Investors Can Do Now?

Buy during the summer pricing window. Savills expects the most significant pricing pressure over the summer of 2026. Weaker buyer sentiment means less competition and stronger negotiating positions. Investors who enter now position themselves ahead of the forecast recovery from 2028.

Focus on regions with 0% decline and the highest five-year growth. The data is unambiguous: the North West and Yorkshire deliver zero capital loss in year one and 25% growth over five. Regional selection matters more than market timing.

Prioritise new-build. Savills notes that further south, houses outperform apartments where leasehold and building safety concerns are prompting buyer caution. New-build developments in the North West avoid these issues — modern construction, developer warranties, and strong tenant appeal provide a cleaner investment proposition.

Lock in before rates fall and competition returns. As mortgage rates decline towards 3.50% by 2030, buyer demand will recover. Properties secured at today’s prices — before that demand returns — stand to benefit from both capital growth and improving financing conditions.
 

Quick FAQ:

    Q: Is now a good time to buy investment property in the UK (2026 Q2)?
    A: The data supports it. Northern markets show zero decline, mortgage rates are expected to fall steadily, and five-year growth of 25% is forecast for the North West. Reduced buyer competition during the correction may also offer more favourable pricing on new launches.

6. New Launches Positioned for the Recovery

The Prow, Manchester

A collection of 62 contemporary apartments in New Islington, one of Manchester’s most established regeneration neighbourhoods. One-bedroom apartments from £277,500 and two-bedrooms from £413,000, with completion targeted for Q2 2028 — timing that aligns with Savills’ forecast of 6.5% annual growth from that year. Developed by Regin Group with 999-year leasehold, £0 ground rent, and a 10%/90% payment structure.

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