The ITEM Club says UK house price growth may slow to 0.7 percent in 2027, with London forecast to fall slightly this year as borrowing costs weigh on demand.
Its latest outlook puts UK growth at 1.1 percent for 2026 before momentum fades again next year, and says London prices may dip 0.1 percent this year while more affordable northern regions hold up better. That fresh regional split matters more to investors than the national headline alone.
For landlords and investors, the fresh forecast matters because it keeps open the gap between areas where borrowing costs are squeezing values and areas where relative affordability is still supporting demand. That split affects acquisition timing, refinancing plans and where rental yields may continue to look more resilient than headline house-price growth.
ITEM Club sees London weakness and slower national growth
According to the forecast, higher living costs and rising joblessness are likely to weigh on demand into next year. Matt Swannell, chief economic adviser to the ITEM Club, said the economy is expected to “flirt with recession” later this year, with housing likely to lose steam as a result.
Matt Swannell, chief economic adviser to the ITEM Club, said an economy under pressure would cause the housing market to lose momentum, while regional performance would continue to diverge.
That regional split is important for landlords because slower national growth does not automatically mean a weak buying environment everywhere. In parts of the North and Midlands, softer price inflation can still sit alongside stronger rental demand and better yields than the South East or London.
This follows Residential Landlord’s coverage of Rightmove’s 14-year June asking-price fall, which pointed to a softer short-term sales market, and earlier reporting on Halifax’s second monthly price dip, which suggested some landlords still had room to negotiate. The latest ITEM Club forecast adds a longer-range warning that weak growth may not be a one-month story.
Landlords may find better value where growth looks unfashionable
The landlord takeaway is not that house prices are about to collapse. It is that capital growth may stay subdued for longer, especially in markets where values already look stretched against local incomes.
That can still create openings. Investors focused on cash flow rather than rapid appreciation may find that slower price growth, especially outside the strongest southern markets, improves entry points and reduces competitive pressure from owner-occupiers.
The bigger risk is assuming a single national story. If London stays weak while northern cities keep posting modest gains, portfolio strategy becomes less about timing the whole market and more about choosing the right micro-market for the next two years.
The underlying forecast was reported from the ITEM Club’s economic outlook.
Opinion
Landlords do not need booming house prices to make money, but they do need realism. If 2027 is shaping up as a low-growth market, the winners are more likely to be disciplined buyers chasing yield and value, not investors still banking on old-style capital gains to do the heavy lifting.
