The latest forecast from Savills offers insights into the future of the UK housing market, with a focus on prime properties. While short-term challenges, including tax reforms and economic adjustments, are expected to affect property prices, the overall outlook remains optimistic for long-term growth in key markets.

Savills anticipates a 4% drop in prime central London property prices in 2025, driven by changes such as the abolition of non-dom status and increased tax burdens. These factors are expected to cool demand temporarily. However, the resilience of needs-based buyers and long-term investors may mitigate some of these effects.

Regional prime markets face fewer direct impacts from tax changes but may experience slower growth due to general economic uncertainty. Nevertheless, these areas remain attractive for buyers priced out of London or those seeking more space.

Beyond 2025, the housing market is projected to recover steadily. Savills forecasts a 10% rise in prime central London prices over the next five years, supported by recovering investor confidence and the unique appeal of London’s luxury properties.

Regional prime markets are set to outperform London in terms of growth, with an 18.2% increase predicted by 2029. These markets benefit from more affordable property options, growing interest in suburban living, and lower mortgage rates, which are expected to stabilize after the current economic turmoil. Coastal and countryside properties, while appealing for second homes, may remain price-sensitive due to fluctuating demand.

Savills’ forecast underscores both the challenges and opportunities within the UK housing market. While immediate factors like tax reforms pose hurdles, the long-term resilience of prime properties in London and regional markets points to a brighter future. Investors and buyers should prepare for short-term fluctuations but remain confident in the market’s recovery potential.