The Midlands and North West of England are set to outperform London in terms of cumulative percentage house price growth since values hit their lowest point following the 2008 financial crisis, a housing market prediction suggests.
Across Britain, property prices are expected to show “modest” percentage increases next year, climbing by 2.5% annually in the fourth quarter of 2026, Hamptons forecasts. However, price growth in London is projected to remain stagnant, with a 0.0% annual change in the fourth quarter of 2026 as the market absorbs tax alterations, the estate agency said. The firm anticipates minor price drops in the £1.9 million-plus property bracket, which it believes will likely be balanced by price rises in the mainstream market.
In the Budget, the Government revealed a high-value council tax surcharge in England for properties exceeding £2million, effective from April 2028. Four price bands will feature the surcharge beginning at £2,500 annually for properties valued above £2million, escalating to £7,500 for properties worth over £5million.
Premium countryside markets experienced robust house price growth after the coronavirus pandemic, during the “race for space” period.
However, Hamptons noted that properties above the £2million threshold “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”.
The report said: “Tax policy is increasingly acting as a levelling-up mechanism, limiting recovery in higher-value markets in London and the South.”
Hamptons predicts that home sales volumes will remain steady at 1.15 million in 2026, with improvements in affordability counterbalancing economic and tax challenges. It highlighted that while London has traditionally been considered a “safe bet” for long-term price growth, this trend is shifting.
Since the market hit its lowest point in the fourth quarter of 2010, house prices in London have surged by 84%, outperforming the British average of 74%, according to Hamptons. However, the firm suggests that next year could represent a significant “turning point”.
It forecasts that the East Midlands will surpass London in terms of cumulative growth next year, with the North West and West Midlands expected to follow suit by the end of 2027.
By 2028, Hamptons anticipates that house prices across Britain will have increased by 84% since 2010.
The report predicts that the East Midlands will be the top performer over this period, with a growth of 94%, followed by the West Midlands (90%) and the North West (88%).
London is projected to see an average house price growth of 84% over the same period – matching the national average. This anticipated shift reflects stronger affordability and economic resilience in some regions compared to London, Hamptons explained.
Whilst London is anticipated to slip to fourth position in terms of percentage price growth, property values in the capital remain higher than other UK regions in absolute terms.
This indicates that the average London property value will still have jumped 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.”
Below are predictions 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%
