Property price growth in UK set to slow to 2% next year

Taylor Scott International News

UK house price growth is predicted to slow to 2% in 2015 and 19.3% to the end of 2019, according to the latest five year forecast from Savills. Prices in London are expected to flat line having hugely outperformed the rest of the UK and is likely to end this year at 15%. The South East is set to be the strongest market seeing price growth of 26.4% by 2019 as buyers take advantage of the relative value of the market. In the short term Scotland is expected to see the biggest price growth in 2015 at 3.5% but slowing to annual growth of 2.5% in 2019 and over the five years seeing growth of 17.6%. The east of England is also likely to see strong growth with the forecast predicting 3% in 2015 and 5% in 2016 with a combined five year growth of 25.2%. The forecast also predicts an increase in the private rented sectors. It says some 1.2 million more households in England and Wales will be private renters by 2019 and 24% of all homes will be privately rented with all the opportunities and challenges that brings for investors and policymakers Only one in six under 35s will be home owners compared to 28% in 2014 and in London there will be around 250,000 more private rented homes, rising to 1.24 million or 36% of all homes. ‘Stress testing of borrowers’ ability to service a mortgage and loan to value lending caps will increasingly limit the amount buyers can borrow, making it more difficult to access or trade up within the market,’ said Lucian Cook, UK head of residential research at Savills. ‘Not only will this suppress price rises, particularly in London, it will also reduce the potential for transaction volumes to return to anything close to a pre crunch norm,’ he added. The report says that the London market now looks relatively fully valued and this has already prompted a change of sentiment among buyers. Savills is therefore forecasting that mainstream London house prices will flat line next year, with five year price growth totalling just 10.4%, the lowest of any region. By contrast, the South East and East of England are expected to show the strongest growth, at 26.4 and 25.2% respectively, as buyers priced out of London seek relative value beyond the capital. At the other end of the scale, the North of England has greatest capacity for growth based on affordability measures, but the strong economic drivers are not in place to support it. ‘Mainstream market performance will be limited by buyers’ capacity to borrow and service debt, but we don’t believe rate rises will be severe enough to trigger a wholesale market correction, so are not forecasting price falls,’ explained Cook. ‘We expect wage rises, an improving economy and greater recycling of existing housing wealth between generations to support growth, while mortgage regulation is likely to prompt greater reliance on the bank of mum & dad with more equity released… Continue reading →

The post Property price growth in UK set to slow to 2% next year appeared first on Taylor Scott International.

Taylor Scott International

Taylor Scott International, Taylor Scott

Comments are closed.