House Prices Set to Fall, Buyers Eye 2028 Recovery as War Keeps Rates High

A war in the Middle East has the City’s mortgage rates stuck at a stubbornly high level, and Savills says it will be 2028 before the housing market clears.

The property consultant’s forecast shows house prices falling 1.5% next year, a modest dip that will keep the market in a low‑grade zone for several more years.

The consequence: buyers will keep looking for bargains while sellers hold their breath, and the City’s financial firms will have to rethink their property‑related advisory services.

In a world where mortgage rates are being dictated by events thousands of miles away, the City’s usual appetite for risk takes on a new, cautious flavour. The result? A new breed of investor who prefers a mortgage with a guarantee of being paid in gold, should the war end.

Savills’ model also hints that the war’s impact on inflation will keep rates higher for longer, a situation that will make the City’s mortgage brokers feel like they’re trading in a currency that has no real backing.

For the average homeowner, the forecast means that the next mortgage payment might be higher than the purchase price, and that any attempt to sell before 2028 could result in a loss that will feel as painful as a bad haircut.

So while the City’s finance circles keep sipping their tea, they’ll also be quietly plotting how to navigate a market that, according to Savills, will only recover once the war’s drama concludes.