London, United Kingdom. British home prices are expected to rise more slowly than previously forecast, a Reuters poll of housing analysts found, as expectations for interest rate cuts fade following the outbreak of war in the Middle East.
Revised forecasts for national house prices
The February 27-March 18 poll of 17 analysts forecast the average price of a home will rise 2.5% this year and 3% in each of the following two years. A December poll had predicted a 2.8% increase in 2026 and 3.3% in 2027.
Ray Boulger at mortgage broker John Charcol said the Bank of England may face a difficult task and that interest rates may now have to rise, citing the war on Iran’s impact on inflation. He said there had been a change in outlook and now expects prices to rise 2% this year and 3% next year, down from his December prediction of 4% for both years.
Mortgage rates and London outlook
Banks have raised mortgage rates significantly since the war started.
In London, where foreign investors are typically a significant factor, prices were expected to rise 1% this year, 2% next year and 2.8% in 2028.
Rents expected to rise faster than house prices
Urban home rents are forecast to outstrip home price rises, rising by over 3% this year and next.
Aneisha Beveridge at estate agency Hamptons said that after softening in 2025, rental growth on newly let homes across Britain is set to reaccelerate this year and is likely to run just ahead of broader inflation. She said demand remains cooler than a few years ago, with more renters becoming homeowners, fewer students, and more young adults living with parents for longer, but that supply remains the bigger issue.
Renters’ Rights Act and rental supply
Beveridge and other respondents cited the Renters’ Rights Act, a new law intended to overhaul the private rental market and provide more security for tenants. Critics say it discourages landlords and contributes to limited rental supply.
How do you expect higher mortgage rates and rental market reforms to affect housing costs where you live?
