Economic summary

News

October brought the inflation jump the Bank of England had been bracing for. CPI rose to 3.5% in the 12 months to September, up from 3.1% in August, with motor fuels again the main driver and core inflation edging up to 2.8%. Three of the nine MPC members already voted to raise Bank Rate to 4% in September, and a first rise since 2023 is now widely expected on 5 November. Activity is holding up — GDP grew 0.7% in the three months to August and unemployment fell to 4.7% — but 30-year gilt yields hit a 28-year high above 6% as oil pushed past $100 a barrel, piling pressure on Chancellor John Healey ahead of his first Budget on 28 October.

Indicators

• Average house prices held at £273k, up 0.2% on the previous month — in line with the ONS, which put annual UK house price growth at 0.9% in the year to August, down from 1.2% in July and the fourth consecutive month of slowing
• Mortgage rates jumped: the average 75% LTV 2-year rate rose to 5.13% and the 95% LTV 2-year rate to 5.70%, up 21 and 18 basis points respectively. That takes the typical 75% LTV fix back above 5% and almost 1.4 percentage points above an unchanged Bank Rate of 3.75% — lenders are pricing in the expected hikes and the gilt sell-off before the Bank has moved. The price data runs to August, while the mortgage series is more current

A note on the model

This month’s forecasts come from model version 2.2, replacing the version 2.1 used in August and September. As with previous upgrades, the regional and local forecasts below are not strictly like-for-like with last month’s, so where we compare them we say so. The 68% prediction bands have not yet been back-tested for the new version, so treat them as indicative rather than measured.

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Current growth rates

The slowdown has spread across England. Northern Ireland still leads on twelve-month growth at +4.9%, but Wales and the North East (both +3.1%) are now joint second, with Scotland third at +2.9% — and Wales and Scotland are the only regions growing faster than last month. Growth has cooled sharply across the North and Midlands: the North West has halved from +4.4% to +2.2%, Yorkshire and The Humber has slowed to +1.8%, the West Midlands to +1.1% and the East Midlands to +0.4%, with the East of England at +0.2%. Three regions are now falling rather than two — the South West (−0.1%), the South East (−0.9%) and London (−2.4%), although London’s decline has eased from −3.3%.

Locally, the top five is drawn from the North West, Scotland and Yorkshire and The Humber, with a cluster of former Pennine mill towns either side of the Lancashire–Yorkshire border. Pendle leads at +9.0%, with Calderdale in Yorkshire and The Humber (+7.7%) and neighbouring Hyndburn (+7.6%) — the only survivor from last month’s list — while West Dunbartonshire (+7.9%) and Highland (+7.4%) represent Scotland. The bottom five is entirely inner London: Tower Hamlets remains weakest at −13.3%, followed by Camden (−10.7%), Islington (−8.7%), Inner London as a whole (−6.7%) and Lambeth (−6.5%), with Kensington and Chelsea and Hammersmith and Fulham dropping off the list. The gap between best and worst has narrowed again, from 24.0 to 22.3 percentage points, as both ends move towards the middle.

Featured chart: flats keep falling behind

This month we’re featuring how each property type is priced relative to the UK average, because flats sit behind most of the weakness above. Detached homes have held remarkably steady at around 1.6 times the average price for two decades. Flats have not: after peaking at around 84% of the average in 2017, they have slid to roughly 71%, the lowest point in the 20-year series. Over the same period terraced houses have edged up from about 81% to 85% of the average, and semi-detached homes have moved above it for the first time in the series.

The latest data show the same split. Flat prices are falling in eight of the twelve regions, led by London (−5.1%), the South East (−2.8%) and the East Midlands (−2.2%), while London’s semis (+1.5%) and detached houses (+1.3%) are still rising. Because flats make up around half of London’s sales, against about a fifth across Great Britain, that is enough to pull the capital’s average down — and it is why the flat-heavy inner boroughs fill the bottom of the local table. Service charges, building-safety costs and landlords selling up are the usual explanations, and none looks likely to reverse quickly.

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Predictions

Overall

The new model takes a more cautious near-term view. It has the £273k average edging slightly lower over the winter and reaching only £274k in a year (+0.4%), against £280k in last month’s forecast, before climbing to £280k by 2028 and £304k by 2031 — around 11% over five years, a touch above September’s £302k endpoint. Growth has been pushed back rather than cut.

The 68% band at five years runs from roughly £291k to £323k, so even its lower edge sits above today’s price, while at one year it straddles the current level — a small fall is well within range.

Regional

Short term (years 1–2): Northern Ireland leads year one at +3.8% — less than half last month’s +8.3% — ahead of the North West (+2.0%), the North East (+1.8%), Yorkshire and The Humber (+1.3%), Scotland (+1.2%) and Wales (+1.0%), while London (−1.1%) and the South East (−0.5%) are forecast to fall and the South West (+0.1%), East Midlands (+0.3%), East of England and West Midlands (both +0.4%) are essentially flat. By year two Northern Ireland has reached +10.9%, with the North West (+5.5%), Yorkshire and The Humber (+5.4%) and the North East (+5.3%) next, and London (+1.1%) and the South East (+1.0%) back in positive territory but still last.

Medium term (years 3–4): Northern Ireland reaches +17% by year three and +22% by year four, while the rest of the country bunches together: by year four Yorkshire and The Humber (+14%) leads the chasing pack, with the North East and North West at +13% and the South West and Wales at +12%. The biggest change from last month is the South East, which goes from stuck at +2% to +5% then +9%, now level with the East Midlands at the bottom rather than trailing on its own.

Long term (year 5): Northern Ireland finishes at +27%, still well clear, with Yorkshire and The Humber (+17%) and the North East, North West and South West (all +16%) next, then London, Scotland and Wales (+15%), the East of England (+14%) and both Midlands regions (+13%). The South East ends at +12%, up from +4% last month, so outside Northern Ireland every region now sits within five points of the others, against a 13-point spread in September.

Flats remain the weak spot almost everywhere. They are forecast to fall in year one in eight regions — deepest in London (−2.2%), the South East (−1.7%) and the South West (−1.6%) — and London and South East flats are still below today’s level after two years (−1.1% and −1.3%). Over five years South East flats manage just +8%, with both Midlands regions at +9%, while Northern Ireland’s flats (+25%) outperform houses everywhere else in the UK. In London the split is by type rather than direction: flats reach +12% over five years against +17% for terraced, semi-detached and detached homes alike.

Local

12-month prediction (to August 2027)

Northern Ireland takes all five top spots again, but the leading figures have roughly halved since last month: Derry City and Strabane leads at +5.0%, followed by Ards and North Down (+4.5%), Mid and East Antrim (+4.4%), Belfast (+4.1%) and Antrim and Newtownabbey (+3.9%). The bottom five has moved out of inner London towards the western and outer boroughs and the commuter belt — Brent (−3.5%), Hounslow (−3.9%), Hammersmith and Fulham (−4.5%), St Albans in the East of England (−4.7%) and Kingston upon Thames (−5.3%) — so none of today’s five weakest areas appears. The model is also more confident about the falls than the rises: the bands for Kingston and St Albans sit entirely below zero, while those for the Northern Irish leaders dip slightly below it.

24-month prediction (to August 2028)

At two years the top five is all Northern Irish once more, led by Mid and East Antrim (+10.4%) and Derry City and Strabane (+10.0%), with Ards and North Down (+9.9%), Belfast (+9.8%) and Causeway Coast and Glens (+9.6%) close behind. The bottom five is London plus St Albans — Wandsworth (−2.1%), Hounslow (−2.2%), St Albans (−2.8%), Hammersmith and Fulham (−3.1%) and Kingston upon Thames (−3.3%). All four that also appear at twelve months show a shallower cumulative fall here, so the model has these areas bottoming out within a year and clawing back some ground in year two.

60-month prediction (to August 2031)

Over five years Northern Ireland runs away with it again, though the leaders have shifted from last month’s rural west and south towards Belfast and the east: Mid and East Antrim leads at +26.6%, followed by Derry City and Strabane (+25.4%), Antrim and Newtownabbey (+25.3%), Belfast (+25.2%) and Ards and North Down (+24.6%). The bottom five is a mixed group with no South East names at all — Stroud in the South West (+8.8%), Wandsworth (+8.6%), High Peak in the East Midlands (+8.4%), Kingston upon Thames (+7.6%, the only place in the bottom five at every horizon) and the City of Aberdeen (+3.6%). Crucially, every one of them rises: the weakest five-year forecast anywhere is +3.6%, against a 2.6% fall last month, although Aberdeen’s band is wide enough to include a small decline.

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Conclusion

The first month on version 2.2 tempers the near term rather than changing the destination. With mortgage rates back above 5% and a rate rise expected on 5 November, the model now has national prices barely moving over the next year (+0.4%) before climbing to around £304k by 2031, roughly 11% in all. Northern Ireland still leads at every horizon, though by a slightly smaller margin, and the rest of the country has converged: every other region lands between +12% and +17%, with the South East no longer the outlier. Flats remain the drag, especially in London, but the model’s weakest five-year forecast is still a rise. A flat year, then a steady climb — still no boom, still no crash.

Economic summary

News

August was written by the bond market. Inflation rose to 2.9% in the 12 months to July, up from 2.6% in June, after Ofgem’s 13% price cap rise pushed gas bills up 14.7% — though core inflation held at 2.6% and services eased to 3.4%. The Bank of England had held Bank Rate at 3.75% on 30 July, but the 6–3 vote, with three members pressing for 4%, marked a shift. Activity held up: GDP grew 0.4% in the second quarter and unemployment eased to 4.9%. Then on 1 September 30-year gilt yields hit 5.89%, their highest since 1998, potentially halving the Chancellor’s headroom before the 28 October Budget.

Indicators

• Average house prices rose to £272k, up 0.1% on the previous month — matching the ONS, which put annual UK house price growth at 2.0% in the year to June, down from a revised 3.0% in May as the Stamp Duty base effect continued to unwind
• The average 75% LTV 2-year mortgage rate eased to 4.79% and the 95% LTV 2-year rate to 5.49%, down 2 and 7 basis points respectively — both now well below the spring peak, though the mortgage series runs to September while the price data stops at June

A note on the model

This month’s figures come from model version 2.1, up from 1.9 in July. The change is not cosmetic. Last month’s model had London topping the five-year rankings at +15% with Northern Ireland trailing at +6%; version 2.1 reverses that almost exactly. Regional and local forecasts below are therefore not directly comparable with previous posts, and the flip is large enough that it is worth treating this month as a fresh starting point rather than an update.

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Current growth rates

The north–south split has hardened into something close to a two-speed market. Northern Ireland is in a category of its own at +9.2% over the year, more than double the next fastest. The North West (+4.7%), North East (+4.3%) and Yorkshire and The Humber (+3.6%) form a clear second tier, followed by a middle group of the West Midlands (+2.6%), East Midlands (+2.4%) and Scotland (+2.3%). The South West (+1.9%) and Wales (+1.8%) sit just below, while the East of England (+1.1%) and South East (+0.3%) have all but stalled. London remains the only region in outright decline at −2.5%, its tenth consecutive month of annual falls.

At local level the dispersion is wider still, and the composition has changed. Newry, Mourne and Down in Northern Ireland leads at +12.8%, followed by Northumberland in the North East (+12.6%), Derry City and Strabane (+12.4%), Preston in the North West (+12.4%) and Derbyshire Dales in the East Midlands (+11.7%). The bottom five is entirely London and entirely prime: Kensington and Chelsea has fallen 14.7% over the year, with Hammersmith and Fulham (−13.3%), Tower Hamlets (−13.1%), Islington (−8.1%) and Camden (−7.1%) close behind. That is a spread of 27.5 percentage points between best and worst, and the losses are now concentrated in the capital’s most expensive postcodes rather than its new-build belt.

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Predictions

Overall

The model takes the current £272.2k to £279k within twelve months, £287k by 2028 and around £297k by 2031 — cumulative growth of roughly 9.1% over five years. The five-year endpoint is unchanged from last month, but the near-term path has been upgraded sharply, from +0.6% to +2.5% in year one.

Worth noting the chart’s own caveat: the 68% bands have historically contained 68–89% of past forecasts at longer horizons, but only 7–22% at six to twelve months. The near-term ranges are too narrow, and should be read as a central path rather than a confidence interval.

Regional

Short term (years 1–2): Northern Ireland dominates year one at +8.6%, three times the next fastest, with Scotland (+3.5%), the West Midlands (+3.1%) and the North West (+3.0%) leading the chasing pack and London the only region forecast to fall, at −0.5%. By year two Northern Ireland has compounded to +15.7% while the North West (+7.3%), West Midlands (+6.8%), Scotland (+6.7%), Yorkshire and The Humber (+6.7%) and North East (+6.6%) cluster together, leaving the South East (+2.4%) and London (+3.0%) at the back.

Medium term (years 3–4): The gap keeps widening rather than closing — Northern Ireland reaches +19% by year three and +22% by year four, with no other region above +11%. The North West (+9% then +11%) leads the rest, with Wales, Yorkshire and The Humber, the North East and West Midlands all clustered at +8% rising to +9–10%, and London recovering to +9% by year four. The South East is the notable casualty: it peaks at +2% in year three and slips back to +1% in year four, the only region to go backwards over the period.

Long term (year 5): Northern Ireland finishes at +29%, more than double any other region. London, the North West, the North East, Wales and Yorkshire and The Humber all land at +13%, with the West Midlands at +11% and Scotland and the East Midlands at +10%. The East of England and South West manage +8%, while the South East brings up the rear at +4% — a striking reversal of the July model, which had exactly these southern regions leading.

Flats remain the weak spot, but the geography of that weakness has shifted. South East flats are forecast to fall in every single year of the horizon (−1.5%, −1%, −3%, −3%, −1%), and flats are the worst-performing type in the East of England, South West and Wales. Northern Ireland is the exception in both directions: its flats start slowest on current growth (+5.7% against +10.3% for semis) yet lead the model at +30% over five years.

Local

12-month prediction (to June 2027)

The near-term leaderboard is a clean sweep for Northern Ireland: Derry City and Strabane leads at +11.2%, followed by Armagh City, Banbridge and Craigavon (+10.4%), Newry, Mourne and Down (+9.7%), Mid Ulster (+9.5%) and Fermanagh and Omagh (+9.2%). The bottom five is an equally clean sweep for London, with Tower Hamlets weakest at −9.5%, then Hammersmith and Fulham (−8.6%), Kensington and Chelsea (−8.0%), Camden (−7.4%) and Wandsworth (−7.2%). The model is not forecasting a broad London recovery in year one — it expects the capital’s correction to run for at least another twelve months, concentrated in the same expensive boroughs already falling fastest.

24-month prediction (to June 2028)

At two years the same five Northern Irish councils hold the top spots, with Derry City and Strabane at +18.1%, Armagh City, Banbridge and Craigavon at +17.5% and Newry, Mourne and Down, Mid Ulster and Fermanagh and Omagh between +15.8% and +16.5%. The London laggards are moderating rather than deepening: Tower Hamlets improves from −9.5% to −6.4% cumulative, with Hammersmith and Fulham (−5.5%), Kensington and Chelsea (−4.7%), Wandsworth (−4.3%) and Camden (−4.2%) all shallower than at twelve months. In other words, the model has prime London roughly finding a floor in year two, but not yet recovering the ground lost.

60-month prediction (to June 2031)

Over the full horizon Northern Ireland runs away with it: Derry City and Strabane and Armagh City, Banbridge and Craigavon are tied at +31.1%, with Lisburn and Castlereagh (+29.2%), Newry, Mourne and Down (+28.9%) and Mid Ulster (+28.5%) close behind. The bottom five has changed character entirely — London has dropped out and the South East coast has taken its place, with Thanet (−2.8%), Dover (−2.3%), the Isle of Wight (−1.2%), Hastings (−1.0%) and Worthing (−0.5%) all marginally negative over five years. The magnitudes matter here: the worst five-year outcome in the country is a 2.8% fall, so this is a story of stagnation on the Kent and Sussex coast rather than a crash anywhere.

Conclusion

Version 2.1 has torn up last month’s script. The rebalancing story used to run in two directions — the affordable North leading now, the South East and London leading later — but the new model keeps pointing the same way throughout. Northern Ireland leads on current growth, on the one-year forecast, on the five-year forecast and at every point in between, finishing at +29% while no other region clears +13%. London’s correction is expected to run another year before flattening, and the South East, not the capital, is now the model’s structural laggard, with a handful of Kent and Sussex coastal towns marginally negative over five years. The national path is unchanged at £297k by 2031, around 9.1% over five years. Still no boom, still no crash — just a different map.

Economic summary

News

Politics dominated the month. Andy Burnham succeeded Keir Starmer as prime minister on 20 July, the UK’s seventh in a decade, and unsettled the gilt market within hours by promising to use “any flexibility” available within the fiscal rules. The data, though, improved. Inflation eased to 2.6% in the 12 months to June, its lowest since March 2025, as motor fuel prices fell, while monthly GDP grew 0.1% in May after April’s contraction and the flash composite PMI rebounded to 52.1 in July from 49.3, its strongest reading since February. Unemployment held at 4.9% and regular pay growth slowed to 3.4%. The Bank of England’s next rate decision lands on 30 July.

Indicators

• Average house prices rose to £271k, up 0.4% on the previous month — consistent with the ONS, which put annual UK house price growth at 2.7% in the year to May, down from a revised 3.9% in April as last year’s Stamp Duty base effect washed out
• The average 75% LTV 2-year mortgage rate fell to 4.81% and the 95% LTV 2-year rate to 5.56%, both down around 10 basis points on the month as the energy-driven spike in gilt yields unwound

Interest rates and mortgage costs

This month we are featuring the spread between Bank Rate and consumer mortgage pricing over the past twenty years. Bank Rate has been fixed at 3.75% since December 2025, yet two-year fixes at 75% LTV spiked to roughly 5.1% in the spring before falling back to about 4.8% — a reminder that borrowers are priced off swap rates and gilt yields, not off the Bank’s decisions directly. The other notable feature is the inversion: for most of the 2010s the five-year fix carried a clear premium over the two-year, but since 2023 that relationship has reversed, with five-year money now the cheaper option at roughly 4.65%. Markets are, in effect, still pricing rates lower over the medium term even as the near-term path stays stuck.

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Current growth rates

The north–south split remains the defining feature of the market, and the five-year annualised figures confirm it is structural rather than a one-month quirk. Northern Ireland leads on both measures, up 6.8% over the year and 6.3% a year over five years, followed by the North East (+5.9% and +4.1% p.a.) and the North West (+5.8% and +4.9% p.a.). Scotland (+4.4%), Yorkshire and The Humber (+4.3%) and Wales (+4.2%) form a solid middle tier with five-year rates of around 4%. The South East (+1.2%), South West (+1.7%) and East of England (+2.3%) lag, while London is the clear outlier at −3.7% over the year and just +0.8% a year over five.

At local level the dispersion is wider still. Newry Mourne and Down in Northern Ireland again tops the table with 12-month growth of +11.9%, followed by two Scottish authorities, Moray and South Ayrshire, both at +11.0%, with Preston in the North West (+10.7%) and North East Derbyshire in the East Midlands (+10.6%) completing the top five. London occupies four of the five weakest positions: Tower Hamlets has fallen 14.8% over the year, its steepest decline yet in this series, with Hammersmith and Fulham (−10.8%), Wandsworth (−6.2%) and Islington (−6.1%) also sharply down, joined by South Hams in Devon (−6.4%). A spread of more than 26 percentage points between best and worst underlines how little the “UK market” behaves as a single market.

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Predictions

Overall

The model projects a flat year followed by a steadier climb, taking the current £271.3k to £273k within twelve months, £281k by 2028 and around £297k by 2031, cumulative growth of roughly 9.5% over five years. That is a more conservative long-run path than last month’s £304k, and the widening confidence band beyond year two reflects genuine uncertainty in the rate outlook.

Regional

Short term (years 1–2): Every region is forecast to grow in year one, led by the North West (+2.7%), Yorkshire and The Humber (+2.5%) and Northern Ireland (+2.4%), with Scotland the laggard at just +0.5%. By year two the pack tightens considerably, with the North West and South West (both +4.2%), the East of England (+4.1%) and London, the South East and Northern Ireland (all +4.0%) clustered together, while Scotland still trails at +1.9%.

Medium term (years 3–4): From year three the southern regions take over. London reaches +6% cumulative by year three, ahead of the East of England, South East, South West, North West and Yorkshire (all around +5%), and by year four the South East leads at +8% with London, the East of England, North West, South West and Yorkshire all at +7%. Scotland (+3%), the North East (+3%) and Northern Ireland (+3%) fall well behind as their early affordability advantage is used up.

Long term (year 5): The five-year ranking is decisively southern. London tops the table at +15%, followed by the South East (+13%), the East of England (+12%) and the North West (+11%), with the South West and Yorkshire and The Humber both at +10%. The regions that led on current growth end up at the bottom: Scotland (+5%), the North East (+6%) and Northern Ireland (+6%) all trail, with Wales (+7%) not far ahead.

Flats remain the weak spot almost everywhere. The model has them falling outright in year two in the East Midlands (−0.8%), West Midlands (−0.2%), Wales (−0.5%), Scotland (−1.9%), the North East (−1.3%) and Northern Ireland (−1.6%), and still negative at year three in several of those regions, a reflection of service-charge and cladding costs that continue to weigh on the sector.

Local

12-month prediction (to May 2027)

The near-term leaderboard is drawn entirely from the affordable North, Wales and the commuter belt. Pendle in Lancashire leads at +7.3%, followed by Rhondda Cynon Taf (+6.1%) and Caerphilly (+5.4%) in Wales, Welwyn Hatfield in Hertfordshire (+5.4%) and Halton in Cheshire (+5.2%). The bottom five is, unusually, entirely London: Tower Hamlets (−9.0%), Camden (−6.7%), Barnet (−5.3%), Inner London as a whole (−5.1%) and Hammersmith and Fulham (−5.1%) are all expected to fall further before the capital’s correction runs its course.

24-month prediction (to May 2028)

By the two-year horizon the composition shifts towards the South and East. Pendle (+10.5%) still leads, but Vale of White Horse in Oxfordshire (+8.5%), Broadland in Norfolk (+8.3%) and Welwyn Hatfield (+8.0%) climb into the top five alongside Rhondda Cynon Taf (+7.8%). The laggards are moderating rather than deepening: Tower Hamlets (−6.4%) remains the weakest, joined by City of Aberdeen (−3.6%), Camden (−3.6%), Cotswold in Gloucestershire (−3.6%) and City of Dundee (−3.2%) — with Scotland now supplying half the bottom five.

60-month prediction (to May 2031)

The five-year view is a London story with a Lancashire outlier. Pendle just holds the top spot at +19.1%, but three outer London boroughs follow immediately behind — Redbridge (+18.8%), Havering (+18.5%) and Barking and Dagenham (+18.2%) — with Vale of White Horse (+18.0%) rounding out the top five. Crucially, no area is forecast to be negative over the full horizon: the weakest are City of Dundee (+0.1%), City of Aberdeen (+0.3%), Tower Hamlets (+0.8%), Causeway Coast and Glens in Northern Ireland (+1.2%) and Perth and Kinross (+1.9%), confirming that Scotland’s north-east, not London, is the model’s persistent structural laggard.

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Conclusion

The rebalancing story now runs in two directions at once. In the here and now the affordable North, Northern Ireland and Wales continue to lead while London and the South East absorb the correction — Tower Hamlets alone is down almost 15% over the year. But from year three onwards the model flips: London and the wider South East top the five-year rankings, the early leaders settle mid-table, and Scotland’s oil-exposed north-east emerges as the only genuinely persistent laggard. As last month’s post noted, the direction of travel is steady rather than dramatic, though the national path has been trimmed to £297k by 2031 — around 9.5% over five years. No boom, and no crash either.

Economic summary

News

The UK economy stayed on fragile footing through June. Inflation, as measured by the Consumer Prices Index, held at 2.8% in the 12 months to May, unchanged from April and its lowest since March 2025, though services inflation climbed to 3.7%, the gauge the Bank watches most closely. With a US–Iran ceasefire easing energy prices, the Bank of England held Bank Rate at 3.75% for a fourth consecutive meeting on 18 June, voting 7–2 as two members pressed for a rise to 4%. Momentum stayed weak, however, with monthly GDP down 0.1% in April and the composite PMI slipping into contraction in May for the first time in over a year.

ONS Revisions

Before we begin, a note on this month’s figures. The ONS has substantially revised its house-price series. Its latest release reports that UK prices rose 3.8% in the year to April 2026, the strongest annual rate since March 2025, up sharply from a revised estimate of 0.0% in the 12 months to March. Much of that jump is a base effect: prices fell 2.9% in April 2025 around the Stamp Duty changes, flattering this year’s annual comparison. Because our model is built on this revised ONS data, several of the growth figures below look markedly different from previous months, and month-to-month comparisons with earlier posts should be treated with caution.

Indicators

• Average house prices rose to £270k, up 0.7% on the previous month
• The average 75% LTV 2-year mortgage rate stood at 4.92% and the 95% LTV 2-year rate at 5.65% — both a touch lower at the latest reading (−0.22 and −0.16 respectively) but well above their spring lows after the energy-driven jump in gilt yields

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Current growth rates

Across the regions, the revised data confirms a stark north–south split. The North East now leads the UK with annual growth of +9.9%, followed by the North West and Yorkshire and The Humber (both +7.2%) and Northern Ireland (+6.8%), with the West Midlands (+5.8%) and East Midlands (+5.5%) close behind. London remains the clear outlier, down −2.1% over the year, while the South East (+0.3%) is barely positive and Scotland (+2.8%), Wales (+3.5%) and the South West (+3.5%) sit in the middle of the pack. The familiar pattern holds: affordability pressure continues to bite hardest in the higher-priced southern markets.

At the local level the divergence is even sharper. Newry Mourne and Down in Northern Ireland leads the country with 12-month growth of +11.9%, followed by Preston in the North West (+10.6%), Caerphilly in Wales (+10.5%), Moray in Scotland (+10.2%) and Derry City and Strabane in Northern Ireland (+10.0%) — a top five drawn entirely from more affordable northern, Welsh and Irish markets. London dominates the other end: Tower Hamlets has fallen −12.6% over the year, with Hammersmith and Fulham (−7.6%), Islington (−5.4%) and Wandsworth (−5.3%) also sharply down, joined by City of Aberdeen in Scotland (−5.6%). The scale of these swings underlines just how unevenly the market is moving.

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Predictions

Overall

The model projects steady growth from the current £270.1k, rising to £274k within a year, £282k by 2028 and around £304k by 2031, cumulative growth of roughly 13% over five years. The widening confidence band beyond the two-year horizon reflects the genuine uncertainty in the energy and geopolitical outlook.

Regional

Short term (years 1–2): In year one, growth is positive across almost every region, led by Yorkshire and The Humber (+3.9%), Northern Ireland (+3.2%), the North West (+3.1%) and the North East (+3.0%), with Scotland the only region in negative territory at −0.2%. By year two the gains broaden to a cumulative +5% or so across Yorkshire (+5.5%), Northern Ireland (+4.9%) and London, the North West and the North East (all +4.7%), while Scotland continues to lag at +1%.

Medium term (years 3–4): Through years three and four London stages a marked turnaround, accelerating to +6% cumulative by year three and +13% by year four — comfortably the strongest four-year gain of any region. The East of England, Yorkshire and the South East (all around +9%) and the North West (+8%) follow, whereas Scotland (+2%) and the North East (+6%) bring up the rear.

Long term (year 5): Over the full five years the ranking inverts relative to recent editions: London tops the table at +24%, ahead of the South East (+20%), the East of England (+17%), Yorkshire and The Humber (+16%) and the South West (+16%). The affordable markets that led early on settle mid-table — the North West (+15%) and East Midlands (+13%) — while Scotland (+6%), the North East (+9%), Wales (+9%) and Northern Ireland (+10%) now trail the field.

Local

12-month prediction (to April 2027)

In the near term the affordable North and West still dominate the top of the table, with Pendle in the North West leading at +7.7%, followed by Newry Mourne and Down in Northern Ireland (+6.9%), Carmarthenshire in Wales (+6.6%), Wirral in the North West (+6.5%) and Newark and Sherwood in the East Midlands (+6.0%). The weakest forecasts remain concentrated in London, where Tower Hamlets (−8.2%), Hammersmith and Fulham (−7.7%) and Barnet (−5.1%) are all expected to fall, joined by City of Aberdeen in Scotland (−5.9%) and Thanet in Kent (−3.3%). The short-term story, then, is little changed: the correction is still biting hardest in the capital and in Aberdeen’s oil-exposed market.

24-month prediction (to April 2028)

By the two-year horizon the composition begins to shift. Pendle (+11.1%) still leads, but two South East commuter areas — Hart (+9.6%) and Vale of White Horse (+9.4%) — climb into the top five alongside Wirral (+8.9%), and, tellingly, a London borough appears among the winners for the first time in months as Haringey reaches +8.9%. The laggards are softening too: Tower Hamlets (−5.3%), City of Aberdeen (−5.0%) and Hammersmith and Fulham (−4.9%) remain negative but their losses are shrinking, with two South West coastal markets — South Hams (−2.2%) and Bournemouth Christchurch and Poole (−1.9%) — completing the bottom five.

60-month prediction (to April 2031)

The five-year view completes the rebalancing and turns the recent narrative on its head. London boroughs now sweep the top of the leaderboard — Haringey (+29%), Barking and Dagenham (+28.5%), Waltham Forest (+27.2%) and Redbridge (+26.2%) — joined only by Vale of White Horse in Oxfordshire (+27.1%), as the capital’s earlier correction gives way to the strongest long-run gains in the country. At the other end, the bottom five are drawn entirely from Scotland, led by City of Aberdeen — the sole area still fractionally negative at −0.7% — alongside City of Dundee (+2.1%), Midlothian (+4.5%), Perth and Kinross (+4.8%) and East Lothian (+4.9%). The affordability that powered Northern Ireland and the North in the short term ultimately gives way to a London-led recovery, while Scotland’s structural weakness persists across the whole horizon.

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Conclusion

The rebalancing theme that has run through recent editions is maturing into something more surprising. In the near term the affordable North, Northern Ireland and Wales still lead, and the correction continues to weigh on London and Aberdeen. But the ONS’s substantial upward revision, together with London’s much-improved affordability, has flipped the medium- and long-run picture: the capital and the wider South East now top the five-year rankings, while Scotland — especially its oil-exposed north-east — emerges as the persistent laggard. As last month’s post also noted, the direction of travel remains steady rather than dramatic. Nationally, the model still points to a gradual climb towards £304k by 2031 — no boom, but no crash either.

Economic summary

News

The UK economic backdrop remained under significant pressure in May. UK inflation eased to 2.8% in April, down from 3.3% in March, helped by lower household energy bills, though the Bank of England warned that continued disruption in the Strait of Hormuz could push inflation back towards 4% by year-end as oil and shipping costs rise. The S&P Global Flash UK PMI composite index fell to 48.5 in May, below the 50-point growth threshold for the first time in over a year, with services activity dropping to a 64-month low of 47.9. According to the ONS Business Insights and Conditions Survey, 34% of trading businesses reported economic uncertainty impacting turnover in early May, five percentage points higher than a year ago.

Indicators

• Average house prices decreased very slightly to £268k on the previous month (-0.4%)
• The average 75% LTV 2-year mortgage rate eased slightly to 4.23%, whilst the average 95% LTV 2-year rate fell to 4.98%.

Home affordability

This month we are featuring the Home Affordability Factor (HAF), defined as average house price divided by median annual salary (median weekly salary × 52), tracked by region over nearly two decades. The national weighted average (black line) currently sits at approximately 8.8, back in line with the long-run historical mean (dashed line) after peaking at around 10.0 in 2022–23. London remains strikingly unaffordable at roughly 13.8 times annual salary, though this has fallen sharply from its peak of 18 in 2016, reflecting both price softening and wage growth. At the other end, Northern Ireland and Yorkshire and The Humber are among the most affordable regions at around 6.5, underpinning the demand momentum evident in their price growth figures.

Current growth rates

The north–south divergence in house price performance remains striking. Northern Ireland continues to lead all UK regions by a considerable margin, with four of the top five fastest-growing local areas drawn from the province. Newry Mourne and Down tops the table with a 12-month growth rate of +11.7%, followed by Derry City and Strabane (+10.2%), Armagh City Banbridge and Craigavon (+8.8%) and Ards and North Down (+7.7%), with Hartlepool (+8.0%) in the North East the sole English entry. The contrast with London is stark: Tower Hamlets (-10.9%), Camden (-7.4%), South Hams in the South West (-7.3%), Hammersmith and Fulham (-6.6%) and Newham (-6.5%) occupy the five weakest positions, underscoring that affordability stress and elevated mortgage rates continue to bite hardest in high-value urban and coastal markets.

Predictions

Overall

The model projects a modest near-term dip before recovery resumes. From the current average of £268.1k, prices are forecast to ease marginally to £266k within one year before rebounding to £275k by 2028 and reaching £305k by March 2031 — representing cumulative growth of approximately 14% over five years. The widening confidence interval beyond the two-year horizon reflects the genuine uncertainty posed by the geopolitical and macroeconomic environment.

Regional

Short term (years 1–2): Northern Ireland is the clear standout in the near term, with overall prices forecast to grow 2.9% in year one and 5% by year two, the strongest short-term trajectory of any region. By contrast, London and Scotland are the only regions forecast to record negative growth in year one (-1.6% and -2.1% respectively), with London only fractionally recovering to -0.3% by year two.

Medium term (years 3–4): The picture brightens meaningfully across most regions by years three and four, with Northern Ireland accelerating strongly to 8% and 15% cumulative growth respectively — the fastest of any region. Yorkshire and The Humber, Wales and the North West all reach 6–7% by year three and 11–13% by year four, while London finally turns positive in year three, reaching around 9% by year four as the correction fades.

Long term (year 5): Northern Ireland leads the five-year rankings at +14%, closely followed by Wales (+13%) and Yorkshire and The Humber (+12%). The North West, East Midlands and North East all achieve double-digit gains of 11–12%. London and Scotland lag the national picture with 5-year cumulative growth of 8%, solid but well below the affordable northern and Irish markets that have driven the rebalancing story throughout this forecast period.

Local

12-month prediction (to March 2027)

The short-term picture is dominated by Northern Ireland and the affordable North. Wirral in the North West leads the one-year predictions at +6.0%, closely followed by Newry Mourne and Down (+5.9%) and Armagh City Banbridge and Craigavon (+5.9%) in Northern Ireland, with South Tyneside (+4.8%) and Doncaster (+4.6%) rounding out the top five, a line-up drawn entirely from Merseyside, Northern Ireland, the North East and Yorkshire. The bottom five remain stubbornly London-centric: Camden is forecast to fall the most sharply at -6.1%, followed by City of Aberdeen (-5.4%), Tower Hamlets (-4.7%), Hammersmith and Fulham (-4.3%) and South Hams in Devon (-4.2%), though losses are notably more moderate than the current 12-month actuals suggest the worst of the correction may already be passing.

24-month prediction (to March 2028)

By the two-year horizon, Northern Ireland strengthens its grip at the top, with Armagh City Banbridge and Craigavon (+9.0%) and Newry Mourne and Down (+8.9%) leading, joined by Wirral (+8.1%), South Tyneside (+7.4%) and reflecting Wales’s improving momentum Rhondda Cynon Taf (+6.8%), marking its first appearance in the top five. The bottom five remain consistent: Camden (-6.0%), City of Aberdeen (-3.8%), Tower Hamlets (-3.4%), Hammersmith and Fulham (-3.3%) and South Hams (-2.6%), though the magnitude of the losses is moderating compared to the 12-month view, suggesting the worst pressures are beginning to ease in high-value southern markets.

60-month prediction (to March 2031)

The five-year view brings a dramatic shift in composition, with Welsh authorities surging to the top of the leaderboard. Carmarthenshire and Rhondda Cynon Taf both top the rankings at +18.1%, joined by Caerphilly (+17.5%), all in Wales, alongside Armagh City Banbridge and Craigavon (+17.3%) in Northern Ireland and Wirral (+17.2%) in the North West. Crucially, even the long-term laggards are now forecast to post positive gains: Camden and Tower Hamlets both reach +0.4%, Hammersmith and Fulham +2.6%, and City of Aberdeen +1.3%, while Cotswold in the South West records +3.1%. The era of deeply negative London territory appears to be a short- to medium-term phenomenon rather than a structural one.

Conclusion

The overarching narrative this month is one of gradual rebalancing rather than crisis. Affordability remains the defining force reshaping the UK property market, with Northern Ireland, Wales, the North West and parts of the North East consistently leading across all time horizons, whilst London and pockets of the South continue to face a correction that is, encouragingly, beginning to moderate by the medium term. Nationally, the model points to a brief near-term pause before resuming its upward path to £305k by 2031. This pattern echoes last month’s post, and the consistency across model updates lends confidence to the underlying direction of travel — no boom, but no structural collapse either.

Economic summary

News

The UK economic backdrop has grown increasingly turbulent over the past month. Inflation, as measured by the Consumer Prices Index (CPI), rose to 3.3% in the 12 months to March 2026, up from 3.0% in February, driven largely by surging energy costs linked to the ongoing Middle East conflict. The Bank of England had expected inflation to fall to around 2% by spring 2026, but the war has disrupted global oil and gas supply, pushing prices higher than forecast, with markets and most economists expecting the Bank to hold interest rates at 3.75% at its 30 April meeting. Meanwhile, economic uncertainty has become the most-cited challenge for UK businesses, affecting 40% of trading firms with ten or more employees in early April, the highest proportion recorded since the question was first introduced in 2022.

Indicators

• Average house prices decreased very slightly to £268k on the previous month
• Mortgage rates for 75 % LTV and 95 % LTV have both jumped by nearly 50 basis points

Current growth rates

Regional house price performance continue to be strikingly divergent. Northern Ireland leads all regions with 1-year growth of +6.3% and a 5-year annualised rate of +6.8%, followed by the North East (+3.6%) and North West (+3.4%), suggesting momentum has firmly shifted towards more affordable northern markets. At the other end, London is the standout underperformer, down 3.3% over the past year and barely growing over five years (+0.6% p.a.), with the South East (-0.9%) and South West (-0.6%) also in negative territory annually. This north-south reversal reflects the continued affordability squeeze in higher-priced regions, where elevated mortgage rates are biting hardest.

At the local level, the north-south divide is even more pronounced. Newry Mourne and Down leads the country with extraordinary growth of +11.6%, while four North West authorities: St Helens (+8.5%), Pendle (+8.4%), Wirral (+8.0%) and Halton (+7.6%) round out the top five, reflecting strong demand in relatively affordable Lancashire and Merseyside markets. The picture is starkly different in London, where Tower Hamlets (-11.3%), Newham (-9.2%) and Camden (-8.5%) are among the sharpest fallers nationally, joined by Hammersmith and Fulham (-7.0%) and South Hams (-7.9%) in Devon. The scale of these swings underlines just how unevenly mortgage rate pressures are being felt across the country.

Predictions

Overall

The model projects a gradual but steady recovery in UK average house prices from the current £268k, reaching £270k within a year, £279k by 2028, and approaching £298k by 2031.

Regional

Short term (years 1–2): The near-term outlook is subdued for much of the country, with London facing the sharpest corrections. Overall prices forecast to fall a further 3–4% in year one before only a marginal recovery to -4% in year two, with flats particularly exposed at -5.3% and -5.4% respectively. Northern Ireland bucks the trend decisively, projecting 5.1% growth in year one and 7% in year two, while most other regions post modest gains of 1–2%, and Scotland dips slightly into negative territory before stabilising.

Medium term (years 3–4): By years three and four, the picture brightens meaningfully across almost all regions, with Northern Ireland continuing to lead — semi-detached properties there are forecast to grow 10.3% in year three and 14% in year four. London begins its slow rehabilitation, returning to positive territory at around 2–5% growth, though it remains the weakest of all regions; the North West, Yorkshire, and the North East all forecast solid mid-single-digit gains, reflecting the continued repricing of affordable northern markets.

Long term (year 5): The five-year view is broadly optimistic, with most regions projecting cumulative growth in the 11–21% range. Northern Ireland again leads at up to 25% for semi-detached homes, and Yorkshire, the North West and the North East all forecast around 15–21%. London recovers to 9–14% by year five depending on property type, a meaningful improvement but still lagging the national picture, reinforcing the structural shift in demand away from the capital that has characterised this cycle.

Local

12-month prediction (to February 2027)

Northern Ireland dominates the top performers, with Newry Mourne and Down leading at +9.7%, joined by Causeway Coast and Glens (+6.5%), while East Cambridgeshire (+7.8%) and Uttlesford (+5.8%), both in the East of England and Northumberland (+6.9%) in the North East also feature strongly. London bears the brunt of the short-term pain, with Camden (-9.6%), Hammersmith and Fulham (-8.9%) and Tower Hamlets (-7.8%) all forecast to fall sharply. Hastings in the South East (-5.0%) and City of Aberdeen (-6.0%) round out the bottom five, suggesting weakness is not confined to the capital alone.

24-month prediction (to February 2028)

By 2028, Northern Ireland’s dominance intensifies, Newry Mourne and Down extends its lead to +12.2%, and three further Northern Ireland authorities enter the top five: Causeway Coast and Glens (+8.8%), Derry City and Strabane (+8.5%) and Armagh City Banbridge and Craigavon (+8.4%), with East Cambridgeshire (+9.5%) the sole non-Northern Ireland entry. The same London boroughs persist at the bottom Camden (-9.1%), Hammersmith and Fulham (-8.0%) and Tower Hamlets (-7.2%), alongside City of Aberdeen (-6.4%) and Hastings (-4.3%), though the losses are beginning to moderate slightly compared to the 12-month view.

60-month prediction (to January 2031)

The five-year picture brings a dramatic rebalancing. London’s worst performers are no longer in deeply negative territory, with Camden (+1.8%), Tower Hamlets (+3.2%) and Hammersmith and Fulham (+4.5%) all recovering to modest positive growth, though they remain the laggards nationally. Newry Mourne and Down tops the leaderboard at +25%, closely followed by three East of England authorities. Uttlesford (+24.9%), East Cambridgeshire (+24.8%) and Dacorum (+24.2%) and Wirral in the North West (+23.6%), suggesting that affordable commuter and lifestyle markets are forecast to deliver the strongest long-run returns. City of Aberdeen is the sole location still in negative territory at -1.3%, reflecting structural challenges in Scotland’s oil-dependent north-east economy.

Conclusion

The overarching narrative across all time horizons is one of rebalancing rather than collapse. Affordability remains the defining force reshaping the UK property market, with Northern Ireland, the North West and parts of the North East consistently outperforming, whilst London faces a prolonged, though ultimately temporary correction. This pattern has been building for some months; with last months post also echoing the same statements. Nationally, the model points to modest but steady price growth towards £298k by 2031 — no boom, but no crash either.

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.

Economic summary

News

The economic picture has been mixed since the last post. GDP grew just 0.1% in Q4 2025, capping a full-year figure of 1.3% (positive), but below the OBR’s 1.5% forecast. The labour market has softened noticeably: unemployment climbed to 5.2% in the three months to December, its highest since early 2021, with youth unemployment particularly stark at 16%. CPI inflation, however, offered some relief, falling to 3.0% in January from 3.4% in December, and the Bank of England expects it to return to around the 2% target by mid-year. The MPC held Bank Rate at 3.75% in February, but only just… a narrow 5–4 vote that was more dovish than markets expected, and a March cut is now widely anticipated. Looking ahead, forward-looking indicators have been surprisingly upbeat: the flash composite PMI hit 53.9 in February (a 22-month high), retail sales posted their fastest annual growth in nearly four years in January, and the government recorded a record budget surplus ahead of the Chancellor’s Spring Statement on 3 March.

Indicators

• Average house prices decreased very slightly to £270k on the previous month
• Mortgage rates for 75 % LTV and 95 % LTV continues to decrease

Current growth rates

Momentum remains concentrated in the north and the devolved nations. Northern Ireland leads the regional table at +7.5% over the past 12 months, followed by Wales (+5.0%), Scotland (+4.9%), the North East (+4.6%) and the North West (+4.5%). The midlands and Yorkshire sit in the mid-single digits, while the southern regions lag well behind — London is in outright decline at −1.0%, the South East is flat (−0.0%) and the South West barely positive at +0.3%. On a five-year annualised view the picture is broadly similar: Northern Ireland (+7.0% p.a.) and the North West (+5.2% p.a.) top the table, while the South East (+2.2% p.a.) and East of England (+2.4% p.a.) bring up the rear.

The affordability chart helps explain this divergence. The national home-affordability factor has drifted back down close to its long-run average after the sharp spike in 2021–22, but the regional spread remains wide. London, despite its price correction, is still far less affordable than anywhere else, sitting around 14× weekly earnings — down from nearly 18× at its peak but still well above the national average of roughly 9×. By contrast, the North East, Scotland and Northern Ireland remain among the most affordable regions, leaving considerably more headroom for price growth before affordability becomes a binding constraint.

At the local level, current 12-month growth (to 2025-12-01) is sharply polarised. The strongest performers are Newry, Mourne & Down (+12.4%), Northumberland (+10.8%), South Lanarkshire (+10.3%), Stafford (+9.9%) and East Cambridgeshire (+9.8%) – A mix of Northern Irish, Scottish and English authorities spread across several regions, suggesting the gains aren’t confined to a single market. The weakest are dominated by London boroughs: Camden (−11.1%), Tower Hamlets (−10.9%) and Hammersmith & Fulham (−9.5%) all posted double-digit declines, alongside the City of Aberdeen (−7.4%) and Cotswold (−6.8%). The gap between the best and worst is now over 23 percentage points.

Predictions

Overall

The forecast assumes a gentle recovery from about £270k (Dec-25) to ~£268k (1yr), ~£280k (2yr) and ~£295k (5yr), roughly +9% over five years (~2% p.a.), which is a fairly subdued growth path. Notably, the model expects a slight dip before prices regain momentum, and the widening confidence interval beyond 2028 highlights the increasing uncertainty at longer horizons.

Regional

Short term (1 year): Most regions are forecast to grow around 2–6% over the next year, with the North East (6.3%), Northern Ireland (5.8%) and the North West (4.9%) leading the way. London is the clear outlier, with the model predicting a further 1.5% decline overall and sharper falls for flats (−4.8%) and detached homes (−8.4%).

Medium term (2–3 years): By two years, the majority of regions cluster around 3–6% cumulative growth, and by three years most sit in the 5–10% range — a broad-based but unspectacular recovery. London remains the laggard, still forecast to be down at the two-year mark (−4.6% overall) and only clawing back to roughly flat by year three, with detached properties particularly weak.

Long term (4–5 years): At the five-year horizon most regions converge toward 10–20% cumulative growth, led by the North East (19%), Yorkshire (13%) and Northern Ireland (17%). London eventually turns positive but trails significantly at around 15% overall, while Scotland (10%) and Wales (7%) also sit at the lower end — and across all regions, flats consistently underperform houses, suggesting the post-pandemic space premium persists.

Local

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

The strongest 1-year gains are concentrated in Northern Ireland and the North East — Newry, Mourne & Down leads at +9%, followed by East Cambridgeshire (East of England, +8.5%), Northumberland (North East, +7.4%), Causeway Coast & Glens (Northern Ireland, +7%) and East Ayrshire (Scotland, +7%). The weakest areas are overwhelmingly London boroughs: Tower Hamlets (−4.2%), Hammersmith & Fulham (−3.8%) and Camden (−2.6%), with Worthing (South East, −1.8%) the only non-London entry in the bottom five. The model is calling a sharp near-term split, with affordable northern and devolved-nation markets pulling further ahead while parts of London continue to correct.

24-month prediction (to 2027-12-01)

At two years, the top five are dominated by Northern Ireland — Newry, Mourne & Down (+10%), Causeway Coast & Glens (+7.9%) and Mid & East Antrim (+7.6%) all feature, alongside East Cambridgeshire (East of England, +9.5%) and Northumberland (North East, +7.9%). The bottom five are now exclusively London: Tower Hamlets (−4.1%), Hammersmith & Fulham (−4%), Camden (−2.7%), Brent (−2.3%) and Newham (−1.6%). The model expects persistent underperformance in specific London boroughs even over two years, while Northern Irish authorities continue to dominate the leaderboard.

60-month prediction (to 2030-12-01)

By five years the leaders rotate slightly — Newry, Mourne & Down (Northern Ireland, +18.9%), East Cambridgeshire (East of England, +18.6%) and Northumberland (North East, +18.4%) hold their positions, but Vale of White Horse (South East, +17.1%) enters the top five, suggesting some long-run resilience in parts of the South East. The laggards are now all positive but trail significantly: Tower Hamlets (London, +2.2%), Hammersmith & Fulham (London, +3.1%), Pembrokeshire (Wales, +4.3%), Camden (London, +4.4%) and City of Aberdeen (Scotland, +5.1%). Across all three horizons, Newry, Mourne & Down and East Cambridgeshire appear consistently at the top, while Tower Hamlets and Hammersmith & Fulham repeatedly anchor the bottom — a remarkably stable pattern.

The overall picture is one of moderate, broad-based recovery, not a boom, with average UK prices forecast to edge up roughly 2% a year over the next five years. The dominant theme remains a north–south and affordability-driven split: cheaper, more affordable regions like Northern Ireland, the North East and parts of Scotland continue to outperform, while London, particularly its flat-heavy boroughs faces a prolonged period of underperformance before eventually returning to modest positive growth. Rate cuts, when they come, should provide a tailwind, but with unemployment rising and household incomes under pressure, the model sees no catalyst for a sharp acceleration. As always, these are model outputs, not certainties. The widening confidence intervals at longer horizons are a useful reminder that the further out you look, the less anyone really knows.

Economic summary

News

Over the past month, the UK backdrop has been mixed-to-soft: inflation stalled at 3.8% in August, prompting the Bank of England on 17 September to hold Bank Rate at 4% (with two members voting for a cut) while continuing to run down gilt holdings.

Growth flatlined in July (0.0% m/m), with production falling and only slight gains in services and construction, and early September survey data point to a sharp loss of momentum as the flash composite PMI slipped to 51.0 from 53.5.

The labour market has loosened further, with unemployment rising to 4.7% in May–July and payrolled employment edging lower on early estimates. Public finances worsened, with August borrowing at £18.0bn, above both last year and OBR projections.

Indicators

• Average house prices increased very slightly to £270k
• Mortgage rates for 60 % LTV and 95 % LTV both decreased on the previous month

Current growth rates

The hottest local markets are clustered in the North East and Scotland: Sunderland leads with annual price growth of 12.7%, followed by Renfrewshire (11.0%), Perth & Kinross (10.8%), County Durham (10.4%) and Halton (10.2%). At the other end, weakness is concentrated in London and the South East: Eastbourne is the steepest faller at –10.5%, while Wandsworth (–6.4%), Hammersmith & Fulham (–5.3%), Barnet (–4.7%) and Brent (–4.7%) are also in decline. In short, growth is strongest across northern and Scottish authorities, while several London boroughs are still sliding.

Affordabilty of housing

Affordability has improved from its 2022 worst but remains stretched: the national HAF (price ÷ median annual pay) sits a touch above its long-run average. London is still the clear outlier, now around the mid-teens on the HAF, down from its peak but far higher than anywhere else, followed by the South East/East/South West in the ~10–12 range. The Midlands, North and devolved nations cluster lower at ~6–8, with the North East at the affordable end near ~6 and Northern Ireland mid-pack. The South–North affordability gap, which peaked around ~2.1–2.2 in the late 2010s, has narrowed steadily since 2022 to roughly ~1.7–1.8—homes are still less affordable in the South, but the differential is clearly shrinking.

Predictions

Overall

The model points to modest nominal growth from a current c. £270k to £274k in 1 year, £282k in 2 years and ~£296k in 5 years, implying roughly 1–2% a year—a gentle grind higher rather than a surge.

Regional

Short term (next 12 months). The model has the UK drifting higher at low-single-digit rates, led by the North East (~+2.5%), North West (~+3%), West & East Midlands (~+2½–3%), Wales (~+2½%) and Yorkshire & Humber (~+2½%); the South West is a touch firmer (~+2–3%). London is the weak spot (about –2% overall, with flats ~–2% to –2½%), while the South East/East of England are broadly flat-to-+1%.

Medium term (2–3 years). Momentum broadens with cumulative gains of ~6–9% across the North & Midlands (NE, NW, Y&H, West Mids), ~6–7% in the South West and ~6–9% in Wales/Northern Ireland; Scotland is steadier at ~3–4%. London remains roughly flat to slightly negative over this horizon (flats weakest), and the South East/East of England notch ~3–5%.

Long term (5 years). The strongest cumulative rises are projected in Northern Ireland (~+18%), the North East/North West (~+15%) and Yorkshire & Humber (~+14%), with the West/East Midlands in the ~+10–12% range and the South West/Wales around ~+9–13%. The South East/East of England are softer (~+5–7%), and London is essentially flat overall (~–1%), with a clear mix by type: flats negative, while detached/semi-detached eke out small gains.

Local

12-month outlook (to 2026-07-01). The model’s top risers are Oldham (North West, +7.17%), Warwick (West Midlands, +5.58%), Chelmsford (East of England, +5.15%), Bromley (London, +5.01%) and Knowsley (North West, +4.60%), a broadly northern/Midlands tilt with a couple of southern outliers. The weakest are heavily concentrated in Scotland and London: South Ayrshire (–8.56%), City of Aberdeen (–7.41%), Brent (–7.35%), Tower Hamlets (–6.12%) and Aberdeenshire (–5.85%).

24-month outlook (to 2027-07-01). Strength stays focused in the North West and nearby: Oldham (+11.03%), Warrington (+8.74%), Cheshire East (+8.41%), Knowsley (+8.37%), with Warwick (West Midlands, +9.76%) also prominent. The laggards are again London/Scotland heavy—Tower Hamlets (–9.92%), City of Aberdeen (–10.49%), South Ayrshire (–8.11%), Barnet (–6.98%) and Hammersmith & Fulham (–6.48%)—suggesting continued south-eastern and North Sea-exposed softness.

60-month outlook (to 2030-07-01). The biggest cumulative gains cluster in the North West and Northern Ireland: Oldham (+26.16%), Knowsley (+22.37%), Bolton (+21.84%), plus Ards & North Down (+23.90%) and Lisburn & Castlereagh (+20.58%). The deepest projected declines are concentrated in London and Scotland—Tower Hamlets (–19.71%), Barnet (–8.79%), Sutton (–6.22%), City of Aberdeen (–21.34%) and South Ayrshire (–6.08%)—highlighting the model’s expectation of a prolonged divergence. Uncertainty is greatest at this horizon (wide CIs), so these should be viewed as directional signals, and to be taken with a big pinch of salt.

Economic summary

News

Over the past month the UK backdrop has been one of cautious improvement with nagging price pressures: the Bank of England trimmed Bank Rate by 0.25pp to 4% on 7 August, citing progress in underlying disinflation, even as July CPI re-accelerated to 3.8% and CPIH to 4.2% on dearer air fares and fuel.

Activity looks patchy: GDP rose 0.4% in June, while the August flash PMI hit a 12-month high (Composite 53.0) on services strength even as manufacturing stayed in contraction.

The labour market continues to loosen — unemployment edged up to 4.7% in April–June and vacancies fell — helping cool pay growth. Public finances offered a small respite, with borrowing in July just £1.1bn, below the OBR’s March forecast. Against this blend of lower rates, sticky services inflation and softer hiring, housing-adjacent indicators are mixed:

Indicators

• Average house prices increased slightly, though still held steady at £269k
• Mortgage rates for 60 % LTV and 95 % LTV have both decreased on the previous month

Current growth rates

Over the year to June 2025, price momentum is skewed towards Scotland and selected towns outside the big cities: Tunbridge Wells leads at +13.16% (a South-East exception), followed by Perth & Kinross (+12.25%), Renfrewshire (+11.76%), Rotherham (+9.91%) and Halton (+9.85%). At the other end, London and southern coastal/rural markets are softening: Wandsworth (–6.99%) is weakest, with Eastbourne (–5.87%), South Hams (–5.80%), Barnet (–5.52%) and Hackney (–5.35%) also in decline. The near 20.2-ppt gap between best and worst underlines a market tilting towards more affordable regional areas while pricier London and southern locations continue to drift.

Predictions

Overall

The model suggests only modest nominal growth in UK house prices, edging up from the current c. £269k to roughly £271k in one year and £282k in two years, before reaching about £300k in five years.

Regional

Short term (1 year): Most regions are flat-to-mildly positive, led by Wales (c. 2.9 per cent), Scotland (c. 2.9 per cent) and Northern Ireland (c. 2.0 per cent), with the Midlands and North West also nudging up. Laggards are London (c. –1.8 per cent), the South East (c. –0.1 per cent) and the North East (c. –0.3 per cent), underscoring softness in higher-cost southern markets.

Medium term (2–3 years): Growth broadens, led by Northern Ireland (c. 7.9 per cent at two years; c. 13.0 per cent at three), Wales (c. 7.4 per cent; c. 10.0 per cent), the North West (c. 5.6 per cent; c. 9.0 per cent) and Scotland (c. 6.7 per cent; c. 9.0 per cent), with the North East improving (c. 3.9 per cent; c. 7.0 per cent). By contrast, London barely advances (c. –0.2 per cent; c. 1.0 per cent) and the South East/East of England remain subdued (c. 4.0 per cent by year three).

Long term (4–5 years): By year five the strongest cumulative gains are in Northern Ireland (c. 21 per cent), with North West, Wales and Yorkshire & the Humber each around (c. 15 per cent); Scotland is (c. 13 per cent) and the East/West Midlands (c. 12 per cent). The South West sits near (c. 11 per cent), the South East and East of England around (c. 7 per cent), while London remains the clear underperformer (c. –1 per cent at year four; c. 1 per cent by year five).

Local

For the next 12 months, the model’s leaders are Gwynedd (Wales, c. 4.42 per cent), Bromley (London, c. 4.22 per cent), Mid Suffolk (East of England, c. 3.84 per cent), Bassetlaw (East Midlands, c. 3.67 per cent) and Rotherham (Yorkshire and The Humber, c. 3.50 per cent).

At the other end, the weakest are Tower Hamlets (London, c. –8.42 per cent), Brent (London, c. –7.95 per cent), Barnet (London, c. –7.68 per cent), the City of Aberdeen (Scotland, c. –6.80 per cent) and South Oxfordshire (South East, c. –6.40 per cent).
This profile shows sharp dispersion—roughly 12.8 percentage points between best and worst—with declines concentrated in several London boroughs, while gains are spread across more affordable regional markets (plus an outer-London outlier in Bromley); the confidence bands are modest, but still suggest that the downside risks are skewed towards the southern high-cost areas.

For the next 24 months, the leaders are Spelthorne (South East, c. 8.96 per cent), Rotherham (Yorkshire and The Humber, c. 8.48 per cent), Lichfield (West Midlands, c. 8.23 per cent), Charnwood (East Midlands, c. 8.23 per cent) and Warrington (North West, c. 8.03 per cent).

At the other end, the weakest are Tower Hamlets (London, c. –10.54 per cent), Barnet (London, c. –8.53 per cent), the City of Aberdeen (Scotland, c. –8.29 per cent), Hammersmith & Fulham (London, c. –5.50 per cent) and Wandsworth (London, c. –4.65 per cent).

This implies a dispersion of roughly 19.5 percentage points, with downside concentrated in high-cost London boroughs (plus Aberdeen) while solid mid-single-digit gains are expected across value-oriented Midlands and northern locations; the confidence bands are moderate, signalling some uncertainty around these central estimates.

For the next 60 months, the strongest cumulative gains are forecast in Armagh City, Banbridge and Craigavon (Northern Ireland, c. 23.8 per cent), Antrim and Newtownabbey (Northern Ireland, c. 22.5 per cent), Oldham (North West, c. 21.8 per cent), Rotherham (Yorkshire and The Humber, c. 21.5 per cent) and Knowsley (North West, c. 21.2 per cent).

The weakest long-run outlooks are Tower Hamlets (London, c. –19.9 per cent), the City of Aberdeen (Scotland, c. –19.9 per cent), Barnet (London, c. –10.6 per cent), Hertsmere (East of England, c. –4.1 per cent) and South Ayrshire (Scotland, c. –3.8 per cent).

This implies a very wide dispersion of about 43.7 percentage points, with long-term strength concentrated in Northern Ireland and value-oriented northern markets, while downside risks persist in several London boroughs and parts of Scotland; confidence bands are present but the pattern points to a continued tilt away from high-cost southern areas.

Conclusion

In summary, the forecasts point to an enduring north–south divide: the 12-month spread runs from (c. +4.4 per cent) to (c. –8.4 per cent), widens at 24 months to (c. +9.0 per cent) vs (c. –10.5 per cent), and by five years reaches (c. +23.8 per cent) vs (c. –19.9 per cent). Former lower-price areas—especially Northern Ireland and the North/ Midlands—are set to lead, while several London boroughs (and Aberdeen) underperform. This reflects persistent affordability pressures and shifting demand towards better-value markets, a pattern likely to define the UK housing landscape for years to come.