Savills has released its forecast for the prime housing market, which expects a gradual recovery across prime London and the regions.
Only Prime Central London is expected to experience a further modest drop in values in 2026, says Savills, with greater growth forecast for the prime markets furthest from London.
However, all prime markets will continue to lag behind mainstream market recovery.
| 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 5 years to 2030 | |
| Prime Central London | -4.8% | -2.0% | 0.0% | +2.5% | +3.5% | +4.0% | +8.1% |
| Outer prime London | -1.3% | 0.0% | +1.0% | +3.0% | +3.5% | +4.0% | +12.0% |
| All prime regional | -3.9% | +1.5% | +3.0% | +4.0% | +4.5% | +3.5% | +17.6% |
Source: Savills Research. Note: these forecasts apply to average values in the second hand market, new build values may not move at the same rate
PCL to return to growth but caution remains
Prime Central London property values are forecast to increase by +8.1% over the next five years, according to Savills, with changes to the tax and regulatory environment causing prices to improve gradually, rather than experiencing a significant bounce.
Values across London’s most rarefied postcodes fell by -4.8% last year, leaving prices 24.5% below their 2014 peak at the end of 2025.
Forecast growth is expected to add £406,000 to a £5 million property by the end of the five-years to 2030.
“The November Budget delivered a better-than-feared outcome for top-end buyers. The new High Value Council Tax Surcharge is unlikely to have much of a direct impact on these markets, especially with much of the impact already priced in following falls to values in the lead up.
“Now, with greater clarity for buyers and sellers, we are seeing early signs that activity is beginning to pick up as buyers take advantage of more certainty and of where values sit.
“But despite global wealth continuing to grow, it remains reluctant to find a home in London in the current tax and regulatory environment. Combined with an already shallower pool of buyers following the end of the non-dom regime, there is little to suggest a return to growth this year, with more modest price movements expected ahead.”
Outer prime London recovery supported by falling interest rates
Savills has forecast stronger growth for outer prime London, with the market more influenced by the cost and availability of mortgage debt.
However, continued pressure on prices in central London will also mean a lack of trickle-down growth that is typically expected during the early part of a recovery.
Prices are expected to remain flat (0.0%) over the course of 2026, with +12.0% growth expected over the next five years, according to Savills, with house values expected to hold up better than flats, in the short term at least.
Prime regional second-home hotspots primed for recovery
Growth is expected to return to the markets furthest from London quickest.
Here, price growth of +1.5% is forecast in 2026, contributing to a five-year projected growth of +17.6%.
Price falls in these markets slowed towards the end of the year (-0.6% in Q4) supported by falling mortgage costs and improved sentiment following November’s Budget, building momentum for an improved 2026, albeit at a modest pace.
“Beyond 2026, we do expect that the introduction of a High Value Council Tax Surcharge may encourage some prime owners to downsize or shift into a lower value home, but ultimately we do not expect to see a rush of new stock to market, especially with the possibility that owners could defer charges until sale or in the event of death.”
Scotland set to be the top-performing prime market over the next five years
Scotland’s prime market is entering 2026 from a position of relative strength.
This is due to a combination of robust sales activity, steady price growth, and broad-based buyer demand. As mortgage rates ease, we expect this resilience to translate into renewed activity across a wide range of markets.
The relatively affordable prime markets of the Midlands, the North of England and Wales are expected to continue to outperform over the forecast period, with Scotland expected to be the strongest performing prime market overall.
“Following January’s Budget and the announcement of two new council tax bands for homes priced above £1 million, we anticipate a short-term uplift in activity in Scotland’s prime housing market” comments Faisal Choudhry, director of research at Savills.
“The two-year lead-in before the changes take effect provides buyers with valuable breathing space, while the decision to keep Land and Buildings Transaction Tax rates unchanged in the coming tax year will come as a further relief, helping to support confidence and transactional momentum in the prime sector.”
