It seems that the successor for the former is somewhat more certain than the latter. But still we expect the corresponding uncertainty to weigh on the prime housing markets over the third and fourth quarters of 2026, as I discussed in my recent blog.

Playing on a sticky wicket

For most of the second quarter, domestic political uncertainty sat more in the background, with greater disruption coming from the events in the Middle East and the corresponding bounce in mortgage rates.

Our prime housing market indices show that prices at the top end remained sensitive to this environment in the continuation of a buyers’ market.

• Prices in central London fell by -1.7% in the quarter bringing annual price falls to -5.0%.
• Elsewhere in London the value of prime properties fell by -1.1% with annual price falls of -2.5%.
• Beyond London, prices also eased back by -1.7% in the same three-month period to leave them down by an average of -3.8% on the same time last year.

You can read more on localised variations here.

Referred to the third umpire

In contrast, disruption in the lettings market has primarily come in the application of new legislation. As I reported last month, that has had the effect of constraining rental supply, which has supported rents across both the mainstream and prime markets, despite economic headwinds.

Again, our own indices show that annual rental growth at the top end of the market stands at +1.5% in central London, +2.5% elsewhere in the capital and +1.3% in the regions. While those statistics might not set the pulses racing like a Ben Stokes cameo, it does point towards a return to slow but steady accumulation of rental gains.

Following on…

Meanwhile in the mainstream market, the Nationwide Index tells us that annual house price growth stood at a muted +2.2% in the year to the end of June, varying from +0.1% the Outer South East to +3.9% in North West.

Somewhat more dramatically, earlier this week the Bank of England reported that mortgage approvals in May came in at 56,200 on a seasonally adjusted basis, well below the average of 63,200 in the previous six months.

Since then, we have seen more competition come back into the mortgage markets and an easing in headline fixed rates, which will have relaxed some of the affordability pressures for new buyers. Headline rates for a 75% loan to value mortgage are now coming in below 4.5% (subject to the usual upfront fees).

Playing in the corridor of uncertainty

Both the progress made in Middle Eastern peace talks and the fact the consumer price inflation was unchanged in May at 2.8% reduces the risk of the Bank of England increasing Bank base rate, even if the next rate cut looks some way off.

This should limit the extent of any associated house price falls, though the wider economic and political outlook continues to suggest a subdued housing market over the remainder of 2026. This is reflected in our recently revised mainstream and prime house price forecasts.

Who is going to open the batting?

In the meantime, we wait to see what a change in leadership means for the political direction of the country and who the so-called “King of the North” will choose as his potential chancellor, something that is likely to dictate the style of play during this Labour government’s second innings.

Articles from across Savills 

Revised Mainstream House Price Forecasts

House prices likely to fall in 2026 as higher mortgage rates reduce demand.

Revised Prime House Price Forecasts

Changing market conditions lead to a more cautious short term outlook for prime housing markets.

Savills View

Explore our latest residential research, which shares insight and analysis into the data and trends currently shaping the UK property market.