Prime regional house prices are forecast to rise by almost 12% over the next five years, outperforming London, according to Savills.
The property firm expects average values across prime regional markets to increase by 11.9% by the end of 2031, compared with growth of 9.7% in outer prime London and 8.7% in prime central London.
However, values are expected to remain under pressure across most prime markets during 2027 before a recovery begins to gather pace from 2028.
Prime regional values are forecast to fall by 2% next year, while outer prime London is expected to decline by 2.5% and prime central London by 2%.
Savills expects outer prime London and the regional markets to return to growth in 2028, while prime central London values are forecast to remain flat that year before recovering from 2029.
Scotland is expected to be the strongest-performing prime regional market over the five-year period, with growth of 17%.
It is also the only prime regional market forecast to avoid a fall in 2027, with values expected to remain flat next year before rising by 3% in 2028.
Wales is forecast to record five-year growth of 15.3%, followed by the Midlands and North at 14.7% and the wider South at 12.4%.
By contrast, prime suburban markets are expected to see the weakest five-year growth at 7.5%, after a forecast 3.5% fall in 2027.
Savills says higher borrowing costs, tax and political uncertainty and greater price sensitivity are continuing to weigh on the prime market.
Savills director of residential research Frances McDonald says: “As a result, recovery is likely to take longer than previously expected, with values remaining under pressure across most markets during 2027.
“But the prime markets are down, not out, and a medium or long-term view is more relevant for prospective buyers.
“Needs-based and equity-driven demand will continue to underpin activity, while lower mortgage rates and an improving economic backdrop should gradually release pent-up demand from 2028 onwards.”
On prime central London, McDonald says higher ownership costs, particularly stamp duty, mean the recovery is unlikely to become firmly established before 2029.
She adds: “In the meantime, demand will remain focused on the highest-quality properties, widening the gap between best-in-class and secondary stock.”
