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UK Mortgage Rates and Home Price Predictions for 2028

Good news for homeowners in the UK! A recent forecast from property adviser Savills suggests that house prices are expected to rise significantly by 2028, potentially boosting homeowners’ equity. Let’s take a closer look at what this forecast means for the housing market and how it could impact mortgage rates.

According to Savills, the average property value in the UK is predicted to increase by approximately £45,000 by 2028. This means that the average house price, currently standing at £254,587 in 2023, is expected to reach £300,108 by 2028. That’s a notable 17.9% increase in property values over the next five years.

The forecast also anticipates a temporary dip in house prices in 2024, with a projected decrease of 3.0%. However, Savills suggests that this decline will be followed by price increases in 2025, 2026, 2027, and 2028. The reason for this positive outlook is that affordability pressures are expected to gradually ease, making it more feasible for people to enter the housing market.

Lucian Cook, head of residential research at Savills, believes that interest rates are reaching their peak, and the worst of the house price declines may be behind us. However, he also mentions that the first cut to rates might still be some time away. This means that while affordability pressures may lead to modest price reductions in the first half of 2024, there is hope for a steady recovery in demand and a progressive restoration of buying power in the years to come.

The recent analysis by one of the UK’s largest mortgage lenders, Halifax, indicates that house prices are on the rise again after six months of declines. In October, the cost of buying a house increased by 1.1%, following a 0.3% fall in September. Although prices are still lower than a year ago, this is a positive sign for homeowners.

Notably, the steepest price declines were observed in the southeast of the UK, where prices fell by 6% over the year, reaching an average of £374,066. However, the data from Halifax aligns with the findings of the Nationwide house price index, which also reported a surprise increase in selling figures.

In summary, while there may be some fluctuations in house prices in the coming years, the overall trend points towards a steady increase in property values. This could have a positive impact on homeowners’ equity and their ability to secure favourable mortgage rates. As interest rates stabilize and affordability pressures ease, the UK housing market appears to be heading in the right direction.

Founded in 2017, Fintuity has fast become one of the only digital Independent Financial Advisers (IFA) in the United Kingdom.  Fintuity offers a wide range of financial advisory services including pensions, protection, investments and mortgage advice. The key difference is that as an exclusively digital service, we can offer significant savings and a service that is direct to you and on demand.

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