Market Outlook Adjusts Amid Global Pressure
JLL has revised its year-end house price forecast downwards, saying that continued geopolitical headwinds will keep house prices broadly flat, ending down 0.5%.
It had previously forecast 2% growth for the year. However, the forecast was based on the assumption of further base rate cuts and best-buy mortgage rates hitting 3.5% by early February. Instead, the economic fallout from the Middle East conflict means JLL no longer expects the improvements in mortgage rates and sentiment that supported its forecast.
It said more affordable, regional markets are still expected to end the year with positive growth, but that growth will fall short of inflation everywhere.
Greater London will now end 2026 down 2.5%, against a previous forecast of plus 1%. In Prime Central London, values are down 8.7% year-on-year in March. Transaction-based data from LonRes shows prices in the three months to April 2026 sitting 9.1% lower than the same period in 2025.
JLL had previously expected central London prices to begin recovering in the second half of the year, ending 2026 flat but has now revised its central London forecast to -5.5% for 2026.
Rental forecast upgraded
However, JLL’s rental forecast has been upgraded, expected to rise 3.5%, up from 2.5% in the UK and forecast to grow 3% in Greater and central London. It says this reflects fewer tenants moving into owner-occupation, as well as the impact of the Renters’ Rights Act. This includes restricted supply as landlords exit the market and an expected increase in prices due to the end of competitive bidding.
However, it said affordability constraints will continue to limit the scope for stronger rental growth over the medium term, with five-year cumulative growth forecasts only marginally higher (1–2 percentage points) than previously expected.
Marcus Dixon, director of UK residential research at JLL, said: “The picture we set out in November was built on the expectation of falling rates, improving sentiment and a gradual return to growth. Geopolitical events have shifted that outlook, and while swap rates have stabilised and more competitive mortgage products are available, the conditions needed to support meaningful price growth this year are unlikely to materialise.
“That said, the fundamentals underpinning the medium-term outlook remain in place. Affordable regional markets continue to show resilience, and rental growth has picked up as fewer tenants make the move into ownership. We expect this to be a year of consolidation rather than contraction in most markets, with prices regaining momentum from 2027 as rates hopefully ease and confidence returns.”
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