Britain's housing market faces a prolonged slump as mortgage costs remain high

Britain's housing market is facing a difficult couple of years, with estate agents Savills predicting that house prices will fall by 1.5% in 2027 before a recovery finally takes hold in the second half of 2028. The prolonged conflict in the Middle East has pushed up energy prices and delayed the prospect of lower interest rates, leaving mortgage costs stubbornly high. But with first-time buyers potentially returning and more affordable regions attracting demand, the market may eventually find its feet – although sellers could have a long wait.

Britain’s housing market unlikely to recover until 2028, says Savills | Housing market | The Guardian

1. Identify one reason why house prices are expected to fall in 2027.

2. Assess whether the price elasticity of supply for houses is elastic or inelastic.

3. Discuss the macroeconomic effects of falling house prices in the UK.