Savill’s five-year forecast for house prices across the UK.
12 February 2014, by Lucian Cook.
With such a division between the housing haves and have-nots, never before has there been such speculation regarding whether current levels of house price growth are sustainable or desirable, so early in a housing market recovery.
Given that interest rates set to rise sooner or later, there is little doubt increased costs of debt will temper the exuberance of house buyers, as affordability becomes tighter.
However, with less of the market dependent on the cost of mortgage debt and its direct cost, neither is there reason to believe that prices are set to triple-dip unless either prices rise too rapidly or interest rates balloon.
As the economic recovery takes root and earnings rise, we believe the average UK house price has the capacity to grow by 25% over the next five years. London may well look expensive if prices continue to rise at their current rate for very much longer, but there is greater capacity for house price growth in other parts of the country.
Not everyone will benefit from that house price growth, as the trends of the past decade continue. The flipside of price growth is reduced access to homeownership and contraction in the mortgaged owner occupied market.
Were it not for the political backdrop, the most equity-rich prime housing markets should see the most growth. However, with the taxation of high value property high on the political agenda and an election looming in 2015, these markets face some unique short-term challenges.
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