Connells Group forecasts UK house prices will rise by just 1.5 percent in 2027, leaving capital growth far below rental returns for many landlords.
The UK’s largest estate and lettings agency group expects prices to rise 1.0 percent in 2026, then 1.5 percent in 2027, 2.5 percent in 2028 and 2.0 percent in 2029. It estimates 2026 will see about 100,000 fewer transactions than anticipated at the start of the year.
High borrowing costs explain the subdued path. Rates are expected to stay above the levels seen for much of the 2010s, which limits buying power even as lower mortgage rates help postponed moves return from 2027.
London lags then leads a shallow recovery
London prices are forecast to fall 1.0 percent in 2026 before rising 2.0 percent in 2027. Outer London should gain from improving mortgage affordability, but higher taxation and weak investor and international demand are expected to hold back the capital’s rebound.
Growth is expected to peak at 2.5 percent across Great Britain and London in 2028, as easing inflation creates room for borrowing costs to fall and demand to broaden. By 2029 growth eases to 2.0 percent as uncertainty ahead of the next general election weighs on activity.
Scotland and the North East are expected to stay among the strongest performers. More limited price growth since 2008 has left those markets comparatively affordable, giving buyers more room to respond when rates fall.
Mortgage rates decide the outcome
Connells warns that if mortgage rates hold around 5 percent, small house price falls next year become more likely. Its central case assumes borrowing costs ease enough to support demand without returning to the cheap money of the last decade.
That caution matches recent market signals. A September report showing transactions down to 94,800 as Budget fears froze the market underlines fragile confidence, while the Bank holding base rate at 3.75 percent with three members seeking a rise shows policy risk still points upward. Forecasts and rate paths are set out by Connells Group market outlook.
This follows Landlord Knowledge’s report on the OBR cutting its house price forecast as landlord tax hikes bite, which also linked weaker price expectations to Budget tax measures and soft demand. Connells now puts numbers on that shallow path through to 2029.
What this means for landlords
- If you rely on price growth: plan for 1 to 2 percent annual gains, not the rapid equity build of the 2010s.
- Focus on yield and cash flow: with growth thin, rental income and voids matter more than short-term valuation.
- Watch for regional gaps: affordable northern markets offer more headroom if rates ease as forecast.
- Time purchases carefully: 100,000 fewer 2026 deals point to choice for buyers, but rate risk could still pull prices lower.
- Bottom line: buy for income now and treat any capital uplift as a bonus rather than the core return.
Editor’s view
Thin growth rewards stock pickers, not market timers. Landlords who buy on yield in affordable postcodes will cope far better than those waiting for prices to rescue weak cash flow.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 03 November 2026
Sources: Connells Group, HM Revenue and Customs, Bank of England
Related reading: OBR cuts house price forecast as landlord tax hikes bite
