Regional performance is largely influenced by where we are in the housing market cycle. Since 2016, we’ve been in the second half of the cycle, where the more affordable regions in the North and Scotland outperform the UK average, and capacity for growth in London and the South is more limited. In the absence of any whole market price correction, this pattern is likely to persist for the next five years, with the strongest growth shifting to late stage markets in the North East, Scotland and Wales.

Key lessons from the last 20 years

The distribution of inflation-adjusted house price growth over the past 20 years provides a useful context for our regional house price forecasts over the next five years. The patterns suggest that we are well on our way through the second half of a housing market cycle. The strongest capacity for price growth is in the regions that have seen the weakest growth over the past two decades, despite having played a degree of catch-up in the past decade.

The two maps below show inflation-adjusted house price growth over the past 20 years, split into two ten-year periods. London and the South East led the way in the first period, with values in the capital growing by 40% in real terms. But in the past ten years, prices across London have fallen by an average of 4% on an inflation-adjusted basis, reflecting the market hitting up against a ceiling of affordability. In contrast, the North West has been the strongest performer of the past decade, where inflation-adjusted price falls of 6% between 2005 and 2015 have given way to real growth of 15% over the last ten years.

This leaves us with a mixed picture. The average sale price today is lower than it was 20 years ago across 26% of the country on an inflation-adjusted basis. But this average disguises huge variation in the capacity for the greatest growth in the future.

Prices in 74% of the North East, 44% of Wales, 36% of the North West, and 32% of Scotland remain below 2005 levels in real terms. In contrast, in 85% of London, prices have risen by more than 20% in real terms. Indeed, the average 20-year inflation-adjusted house price growth across all of London’s 75 parliamentary constituencies comes out at 32%, well ahead of any other region.

This demonstrates that despite underperforming the UK over the last decade, prices in London are still uncomfortably dislocated from the rest of the UK, suggesting that a wider rebalancing of prices between the North and the South still has some way to go.

Affordability at the forefront

As the pandemic-driven disruption that has driven regional growth over the last five years has now largely worked its way through the system, we anticipate that affordability will once again become the key influence on house price performance.

The average mortgaged buyer in London now requires a household income over £125,000 and a deposit that is more than double the UK average. Even with the recent relaxation of mortgage regulation, this presents a barrier that constrains the potential for house price growth in less affordable areas that will persist over the next five years.

The short-term indicators from the RICS sentiment survey confirm this trend, with more affordable areas showing greater resilience in the stop-start market of 2025. The net balance of opinion for new buyer enquiries and price expectations is strongest in the North, North West, Scotland and Wales, while southern regions have seen a more significant drop off in key sentiment indicators over the summer.

The pace of rebalancing

To date, the rebalancing phase of this cycle hasn’t been quick, particularly in comparison to that seen in the late 1980s or early 2000s. We expect that this gradual process of convergence will continue; mortgage regulation prevents the 20% annual growth seen in the North, Scotland and Wales towards the end of the last cycle. Instead, without external economic shocks that would lead to widespread price correction, London and the strongly linked markets in the South and East of England will continue to underperform the UK.

As outlined above, this will primarily be driven by the relative affordability of regional housing markets, combined with diverging economic performance. ONS data shows that regional cities have led the way in productivity growth since 2019, with Leeds, Liverpool and Manchester seeing annual growth in excess of 3%, while London has remained flat.

By the end of our forecast period, stronger price growth will bring average values in the North West to within 15% below the UK average, compared to almost 30% below ten years earlier. In contrast, we therefore see London prices moving back to be 33% above the UK average, down from 70% above at the start of 2017. This process of convergence will provide the foundation for London to begin outperforming once we enter the next phase of the market cycle during the 2030s.

_{Note: These forecasts apply to average values in the second-hand market, new build values may not move the same rate}

_{Read the other articles within Mainstream Residential Forecasts 2026–2030 below}

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