House prices to slide as Iran war pushes up rates

House prices to fall by two per cent this year

Savills forecasts UK house prices to fall 2% in 2026 (−6% in real terms), with London down 4%, as average two-year fixed mortgage rates hit 5.8% following the Iran war shock. For real estate-heavy portfolios and firms planning office or facility investments, rising borrowing costs and weakened sentiment signal a prolonged demand contraction through mid-2026, with partial recovery expected only in 2027.