Firstly, apologies it’s been so long since I last posted. I’ve been working hard on improving the model and the pipeline that feeds into it. A lot has happened since I last posted, so lets get started…

Economic summary

News

So what’s been happening in that time… The big story has been a gradual easing in the inflation shock alongside weak (but positive) growth, which has allowed the Bank of England to pivot towards rate cuts. The MPC held Bank Rate at 4% in early November, then cut it by 0.25pp to 3.75% in mid-December, stressing that any further reductions would be guided by incoming data. Over the same period, inflation fell to 3.2% in November before edging up to 3.4% in December. Activity has remained, GDP rose 0.1% in Q3 2025 and monthly GDP grew 0.1% in November, but early January surveys suggested momentum improved, with the flash PMI rising to 53.9.

Indicators

• Average house prices increased very slightly to £271k on the previous month

• Mortgage rates for 75 % LTV and 95 % LTV both decreased on the previous month

Current growth rates

Momentum remains concentrated in the North, with northern regions featuring most prominently among the strongest performers on both a one-year and five-year view. Northern Ireland records the fastest longer-term growth at +6.7% p.a. (5yr annualised), while the North East leads on the latest 12-month measure at +6.8% (1yr).

On a local level current 12-month house price growth (to 2025-11-01) is sharply polarised. The strongest performers are East Cambridgeshire (+12.5%), followed by Derry City and Strabane (+9.6%), South Lanarkshire (+9.4%), North East Derbyshire (+9.3%) and Vale of White Horse (+9.2%), indicating robust gains spread across several regions. At the other end of the spectrum, declines are dominated by London boroughs: Tower Hamlets (−10.6%) is the weakest, with further falls in Cotswold (−8.4%), Brent (−7.8%), Camden (−7.8%) and Hammersmith and Fulham (−7.1%). Overall, the gap between the top and bottom locations is sizeable at 23.1 percentage points, underscoring very uneven local market conditions.

Predictions

Overall

The forecast assumes a fairly smooth recovery from about £271k (Nov-25) to ~£287k (1yr), ~£302k (2yr) and ~£324k (5yr) — roughly ~19% over five years (~3–4%/yr), which is a moderate growth path rather than a boom.

Regional

Short term (1 year): Most regions are forecast to grow around ~3–5% over the next year (e.g., North West 4.8%, North East 4.9%, East Midlands 4.1%), but there are clear laggards: London is -1% overall (flats -3.2%), with South West 0.9% and Wales 1.3% also subdued. That pattern reads like a “north/affordability keeps running, higher-priced markets tread water” call, with flats generally weaker than houses.

Medium term (2–3 years): By 2 years, most regions cluster around ~6–8% cumulative growth, and by 3 years they’re mostly in the ~9–14% range—while London only gets to ~4% by year 3, still trailing the pack. The model also keeps houses (terraced/semi/detached) ahead of flats in most places, suggesting a continuation of the post-pandemic preference/space premium rather than a flat-led rebound.

Long term (4–5 years): At 4–5 years, the forecasts largely converge to ~14–16% (4yr) and ~18–20% (5yr) across many regions, implying the model expects regional gaps to narrow over time. The main exceptions are London (~14% at 5yr) and a couple of softer nations/regions (Wales ~16%, South West ~17%), which suggests a structurally slower path for the most expensive and some weaker-demand markets.

Local

12-month prediction (to 2026-11-01)

The strongest 1-year gains are concentrated in Scotland—Renfrewshire (7.8%), East Ayrshire (7.8%), and East Dunbartonshire (7.0%)—with East Cambridgeshire (East of England, 7.0%) and Derry City & Strabane (Northern Ireland, 6.0%) also in the top five. The weakest areas are mostly London boroughs—Tower Hamlets (-6.1%), Hammersmith & Fulham (-3.1%), Newham (-2.8%)—plus Colchester (East of England, -2.7%) and King’s Lynn & West Norfolk (East of England, -2.6%). Net message: the model is calling a sharp near-term split—Scottish authorities leading, while parts of London and pockets of the East of England are forecast to fall.

24-month prediction (to 2027-11-01)

At 2 years, the top five are still dominated by Scotland—Renfrewshire (10.1%), East Ayrshire (9.5%), East Dunbartonshire (8.7%), North Lanarkshire (8.0%)—with Burnley (North West, 8.3%) the non-Scottish entrant. The bottom five are all London: Tower Hamlets (-5.9%), Hammersmith & Fulham (-2.7%), Newham (-2.4%), Hackney (-2.0%), Croydon (-2.0%). Compared with the 12-month view, the “winners” broaden slightly (via Burnley), but the model still expects persistent underperformance in specific London boroughs even over two years.

60-month prediction (to 2030-11-01)

By 5 years the leaders rotate to the South East—Vale of White Horse (19.1%), Havant (18.6%), Oxfordshire (18.0%), Oxford (17.8%)—with Derry City & Strabane (Northern Ireland, 17.6%) also near the top. The laggards are low-but-positive and skew South West plus one London and one North East authority: Gloucester (South West, 5.3%), North Somerset (South West, 4.4%), Torbay (South West, 4.2%), Tower Hamlets (London, 3.7%), Redcar & Cleveland (North East, 3.1%). This suggests the model expects long-run resilience in the South East, while several South West areas (and specific pockets of London/North East) deliver much lower cumulative growth.

Across horizons, the model’s story changes from Scotland-led outperformance in the near/medium term to South East-led outperformance over 5 years, while certain London boroughs repeatedly sit in the bottom group (often negative in the shorter horizons)