Economic summary

News

The UK economy has entered 2026 on fragile footing, with the British Chambers of Commerce revising its GDP growth forecast down to just 1.0% for the year amid weak productivity, subdued investment and cautious consumer spending. Inflation held at 3% in February, but economists warn this figure does not yet reflect recent energy price increases, with some forecasts suggesting it could exceed 4–5% later in the year, driven largely by the ongoing Middle East conflict disrupting global energy markets.

Unemployment is expected to rise to 5.5% in 2026, while the Bank of England’s agents report a lacklustre economy, with employment intentions slightly negative and businesses continuing to report squeezed profit margins. Consumer confidence has fallen sharply to its lowest level in more than two years, casting a shadow over household finances and the broader property market

Indicators

• Average house prices decreased very slightly to £268k on the previous month
• Mortgage rates for 75 % LTV and 95 % LTV have both ticked up

Current growth rates

Regional house price growth tells a clear north–south story. Northern Ireland leads the pack with annual growth of +6.3%, followed by the North West (+3.1%) and Yorkshire and The Humber (+3.0%), reflecting strong demand and relative affordability across these regions. The Midlands and Wales are also holding up, posting solid gains of between +2.0% and +2.4%. At the other end of the spectrum, London is the only region recording a notable decline, with prices falling -1.7% over the past year, while the South East (-0.5%) and South West (-0.1%) are broadly flat, suggesting affordability pressures continue to weigh on the higher-priced southern markets.

At the local level, the divide becomes even more striking. Newry Mourne and Down tops the table with an exceptional 12-month growth rate of +11.6%, with Darlington (+9.5%), Wirral (+8.8%), South Tyneside (+8.3%) and Northumberland (+8.2%) completing a top five drawn entirely from Northern Ireland and the North of England, underscoring the strength of demand in more affordable markets. The bottom five tell the opposite story, and are dominated by London boroughs: Camden (-10.1%), Tower Hamlets (-9.5%) and Hammersmith and Fulham (-8.5%) are all seeing sharp price falls, joined by Newham (-6.1%) and North Norfolk (-5.6%), suggesting that high-value urban markets and coastal second-home hotspots are facing the steepest corrections.

Predictions

Overall

The UK average house price currently stands at ~£268k, with the model forecasting modest but steady growth over the coming years — rising to £274k within a year and £278k by 2028. The longer-term outlook points to £298k by 2031, representing an increase of around 11% over five years, though the widening confidence interval reflects the growing uncertainty in that horizon.

Regional

Short term (years 1–2): London is the clear outlier in the near term, with prices forecast to fall around 3.3% in both of the next two years across most property types. Elsewhere, growth is modest but positive, with Northern Ireland (+5.8% in year one) and the North East and Yorkshire leading the way.

Medium term (years 3–4): By the middle of the forecast period, London begins to recover, turning positive in year three and reaching around +7% by year four. Northern Ireland accelerates strongly to +11% over four years, while the North West, East Midlands and Yorkshire are all forecast to hit double-digit cumulative gains.

Long term (year 5): The North West emerges as the strongest performer over the full five-year horizon at +22%, closely followed by Northern Ireland (+21%) and Yorkshire and The Humber (+19%). London and Scotland lag behind the national picture, reaching +10% and +11% respectively — solid gains, but well below the growth expected across the more affordable northern and Irish markets.

Local

12-month prediction (to January 2027)

The near-term picture is geographically diverse at the top, with East Cambridgeshire (East of England) leading at +9.5%, followed by Newry Mourne And Down in Northern Ireland at +9.2% and Northumberland in the North East at +7.5%. Blackburn With Darwen and Causeway Coast And Glens round out the top five at +7.0% and +6.5% respectively. The bottom five are almost exclusively London boroughs, with Camden forecast to fall -8.1%, Hammersmith And Fulham -7.8% and Tower Hamlets -7.7%.

24-month prediction (to January 2028)

Northern Ireland dominates the top five over two years, with Newry Mourne And Down surging to +12.8% cumulative growth, joined by Derry City And Strabane (+9.8%), Causeway Coast And Glens (+9.4%) and Ards And North Down (+8.8%) — East Cambridgeshire is the sole non-Northern Irish entry at +10.4%. London boroughs continue to struggle at the bottom, with Camden (-7.6%), Tower Hamlets and Hammersmith And Fulham (both -7.1%) and Newham (-4.2%) all in negative territory, now joined by City of Aberdeen in Scotland (-3.6%).

60-month prediction (to January 2031)

Over five years, the gap between winners and losers narrows significantly, as even the weakest performers largely recover, the notable exception being Tower Hamlets, which is the only location still fractionally negative at -0.3%. East Cambridgeshire (+25.3%) and Newry Mourne And Down (+25.2%) top the long-term table, with North West locations: Cumberland, Liverpool and Oldham all clustered around +24%. The London boroughs that struggled in the short term bring up the rear, posting only modest cumulative gains of between +1.4% and +3.7% over the full five years.

Across all three time horizons, a consistent narrative emerges: affordability is the defining driver of UK house price growth. Northern Ireland, the North West and parts of the North East repeatedly feature among the strongest performers, whilst London boroughs (particularly Camden, Tower Hamlets and Hammersmith And Fulham) face a prolonged period of underperformance. Encouragingly, the five-year view suggests that even the weakest markets largely recover, pointing to a rebalancing rather than a structural collapse in London values. For buyers and investors alike, the data makes a compelling case for looking north and west.