Midlands and North West ‘will overtake London for house price growth since 2010’

The Midlands and the North West of England are poised to out-perform London for cumulative percentage house price growth since prices reached a low point after the 2008 financial crash, according to a housing market forecast.

Overall, house prices are expected to record “modest” percentage growth next year, rising by 2.5% annually across Britain in the fourth quarter of 2026, according to Hamptons.

But price growth in London is expected to be flat, with a 0.0% annual change in the fourth quarter of 2026 as the market digests tax changes, the property firm said.

It expects to see small price falls in the £1.9 million-plus house price bracket, which it said is likely to be offset by price growth in the mainstream market.

In the Budget, the Government announced a high value council tax surcharge in England on homes above £2 million from April 2028.

There will be four price bands with the surcharge starting at £2,500-a-year for properties worth more than £2 million, and rising to £7,500 for properties worth more than £5 million.

Prime country markets saw strong house price growth following the coronavirus pandemic, during the “race for space”.

But Hamptons said that properties above the £2 million mark “could see around a 5% price correction, but this is expected to be a one-off adjustment rather than a prolonged decline, as markets absorb the change and stabilise”.

It said: “Tax policy is increasingly acting as a levelling-up mechanism, limiting recovery in higher-value markets in London and the South.”

Hamptons said that home sales volumes are forecast to remain steady at 1.15 million in 2026, with affordability improvements offsetting economic and tax headwinds.

The report said that, while London has historically been the “safe bet” for long-term price growth, the picture is changing.

Since the fourth quarter of 2010, when the market “bottomed out”, house prices in London have risen by 84%, outperforming the average across Britain of 74%, Hamptons said.

But it said next year could mark a “turning point”.

Hamptons said the East Midlands is forecast to overtake London in cumulative growth next year, with the North West and West Midlands following by the end of 2027.

By 2028, Hamptons expects house prices across Britain to have risen by 84% since 2010.

The East Midlands will be the “top performer” over the period (with 94% growth), followed by the West Midlands (90%) and the North West (88%), the report predicted.

London is expected to record average house price growth of 84% over the same period – in line with the average across Britain – and the expected shift reflects stronger affordability and economic resilience in some other regions compared with London – Hamptons said.

While London is expected to be pushed into fourth place in terms of percentage price growth, in cash terms house prices are still higher in London than in other regions in the UK.

This means that the average value of a property in London will still have surged by £257,000 between the fourth quarter of 2010 and the fourth quarter of 2028, according to the forecast.

Aneisha Beveridge, head of research, at Hamptons, said: “Inflation is easing, mortgage rates are falling, and affordability is improving, which should support modest price growth next year.

“But it’s hard to ignore the growing drag of taxation and politics.

“London, which historically leads recoveries, is being held back by higher stamp duty and broader tax anxieties, locking some owners into their homes and others out of buying them.

“The next phase of the cycle will be shaped less by discretionary moves and more by pragmatism – with policy playing an increasingly central role in determining who moves, when, and where.

“At the same time, the balance of power is shifting: the Midlands is forecast to have seen more price growth than London since prices bottomed out after the 2008 financial crash.”

Here are forecasts for annual house price growth in the fourth quarter of 2026, according to Hamptons:

London, 0.0%

East of England, 0.5%

South East, 0.5%

South West, 1.5%

East Midlands, 3.0%

West Midlands, 3.5%

North East, 4.5%

North West, 3.0%

Yorkshire and the Humber, 4.0%

Wales, 3.5%

Scotland, 3.0%