UK House Prices in 2026: Three Regions Are Defying the National Dip

If you only read the national headline, the UK housing market looks like a place to avoid in 2026. Savills Research, in its June 2026 forecast, expects average UK house prices to fall by 2 percent this year. But national averages are where the useful information goes to die. Beneath that single number sits one of the widest regional spreads we have seen in years, and for investors, the spread is the story.

A market of two halves

At the weak end of the table sits the South. According to the Savills forecast, London is expected to fall 4 percent in 2026, with the South East and the East of England each down 3.5 percent. These are the regions where prices ran furthest ahead of incomes during the cheap-money years, and they are now paying for that altitude.

At the other end, three regions are forecast to record no decline at all this year.

• • The North West: 0 percent in 2026, with 25 percent cumulative growth forecast by 2030.
• • Yorkshire and the Humber: 0 percent in 2026, also reaching 25 percent by 2030.
• • The North East: 0 percent in 2026, with 23.9 percent growth forecast by 2030.

Set those against London's projected 10.6 percent growth to 2030, or the South East's 13.4 percent, and the gap is striking. The national five-year figure of 18.5 percent cumulative growth conceals two very different markets: a South treading water and a North compounding steadily.

Why the North is holding firm

The mechanics behind the divergence are not mysterious. Northern markets entered this rate cycle from much lower price points. When the average home costs a fraction of its southern equivalent, buyers borrow less, mortgage payments consume less of household income, and the market is simply less sensitive to interest rates. Valuations in the North never became as stretched, so there is less excess to unwind.

The rate environment matters here. Oxford Economics and Bank of England data point to average mortgage rates rising to around 4.78 percent in 2026 before easing toward 3.5 percent by 2030, with the base rate forecast to sit at 3.75 percent through late 2027. CPI inflation is running at around 3.9 percent this year, and GDP growth forecasts have been trimmed to 0.7 percent. In other words, the affordability squeeze is real and will not vanish quickly, which is precisely why lower-priced, less leveraged regional markets are outperforming.

But affordability alone does not produce 25 percent five-year growth forecasts. The northern cities also have a structural demand story that the South currently lacks.

Regeneration is doing the heavy lifting

Manchester's development pipeline is anchored by a regeneration programme valued at roughly 38 billion pounds, reshaping districts across the city and pulling in employers, students and residents at a pace the housing supply has struggled to match. On Merseyside, the 5.5 billion pound Liverpool Waters scheme is transforming the city's northern docks into a new waterfront district over the coming decades.

Projects on this scale do something subtle but important: they create demand that is independent of the interest rate cycle. People move for jobs, universities and quality of life, not for basis points. When a city is physically adding employment floorspace, transport capacity and amenities year after year, its housing demand has a floor under it that no forecast spreadsheet fully captures.

What this means for investors

A few practical conclusions fall out of the data.

• • Timing the national market is the wrong frame. The UK does not have one housing market; it has a dozen. A 2 percent national fall is consistent with flat prices in Leeds and falling prices in Surrey.
• • 2026 looks like an accumulation year in the North. Flat pricing in a region forecast to grow roughly 25 percent over five years is, historically, the kind of window investors look back on fondly.
• • Rate relief is the likely catalyst. With mortgage rates forecast to decline meaningfully by 2030, regions where affordability is already comfortable stand to benefit first and most when borrowing costs ease.
• • The South's recovery will come, but later and slower. Double-digit five-year growth in London is not a disaster, but it trails the North by a wide margin on these forecasts.

None of this guarantees outcomes, forecasts are forecasts. But the consistency of the regional pattern across Savills, lender indices and the major portals over the past eighteen months suggests this is a durable shift, not statistical noise. The centre of gravity of UK house price growth has moved north, and the institutions building five-year models have noticed.

Silkwood Group specialises in connecting UK and international investors with residential developments in exactly these outperforming markets, including Manchester, Leeds and the wider North. If you want to position ahead of the next growth cycle rather than behind it, get in touch with our team.