House prices forecast to fall by 1.5% next year as Middle East war keeps mortgage rates higher for longer

Britain’s sluggish housing market is not expected to recover until 2028 as higher mortgage rates linked to the war in the Middle East deter buyers and weigh on prices.

The property firm Savills said average house prices were expected to drift lower during the rest of 2026 and fall by 1.5% in 2027, as the prolonged conflict undermines buyers’ confidence and keeps mortgage rates higher for longer.