Savills increase their growth forecasts for UK house prices
May 21, 2024
“Falls in the cost of debt and an improving economic outlook have created more capacity for house price growth” announced Savills at the beginning of May as they increased their UK house price forecasts to a nationwide average rise of 21.6% by 2028.
Not known for their moderation, the UK tabloids quickly picked up on this, BRITAIN ON THE VERGE OF HOUSE PRICE BOOM ran the front page of the Daily Express. At RPA we have been beating this drum for a few months now but it is worth looking at why Savills have done this.
Why did Savills revise their house price forecasts?
The UK housing market has performed stronger than expected in Q1 & Q2 2024.
Falls in the cost of mortgage debt look likely to push houses to increase in value by 2.5% this year.
Finally, the growing consensus that the Bank of England will start to cut rates at the end of June, combined with the UK’s ‘improving’ economic performance, means we’re likely to see increased demand for properties again, thus increasing the capacity for price growth, fuelled by buyer competition.
How and where are UK prices expected to rise the most?
Savills has put a nationwide rise in average prices at 21.6% by 2028, up from the previous forecast of 17.9% which it released back in November. But there are areas of the UK that really outperform, most notably the North West where the five year growth forecast has leapt from 21.5% to 28.8% by 2028.
See One Victoria, superbly located at the heart of Manchester’s city centre renaissance where units start from £277k and are modelling a 6% yield.
Next on the list in terms of price growth is Yorkshire and The Humber at 28.2% and where you can pick up a property in our Gleadells Wharf development from only £148k with yields of up to 6.2%.
Birmingham and the West Midlands are also up there at 23.4% growth and we’ll continue to bang the drum for the Jewellery Quarter, where many of our clients have already bought exceptionally well.
The East Midlands is also another area of sharp growth at 22.8% areas like Northampton, Cambridge and East Anglia home to our Sudbury Fields development.
2027 will see the most accelerated price growth; the North West increasing by 6.5% and the West Midlands by 6% with London a more modest 3% where affordability constraints are still a factor. That said, prices in Outer Prime London (places such as Canary Wharf ) are predicted to rise by 18.7% by 2028, significantly more than the predicted citywide average of 14.2%.
To make the most gains, buy UK investment property now
We’ve said it, Savills have said it…but now really is the time to buy UK investment property if you want to make the most gains.
Buy now before prices begin to rise
Buy now before the shortage of new homes kicks in to the new build market, squeezing supply and sending prices – and demand – soaring upward
New home completions have averaged around 210,000 per year over the past five years and are predicted to fall to 160,000 this year. Higher debt costs and inflation increasing build costs for house builders, a worrying fall in the number of planning approvals for new builds and higher mortgage rates have all combined to make the perfect storm to discourage both developers from building and buyers from buying. This is soon to end, so if you’re looking to be ahead of the curve, now is the time to buy.
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RICHARD BRADSTOCK
Managing Director
about the AUTHOR
RPA’s founder, Richard has worked in residential development investment for 20 years and oversees the general running of the business ensuring the RPA Group retains true to its founding principles. Over his career Richard has built an incredible network of international property investors and like-minded industry professionals. The RPA Group was born out of a duty of care to provide property investors with an industry-leading and integral service, one that connects investors with quality and desirable investment opportunities, whilst providing reliable and trustworthy market commentary and analysis alongside, enabling investors to make the best, most-educated decisions for them.