MARKET INSIGHT
What’s in store for the UK Housing Market in the next 5 years?
Savills and JLL release new 5-year forecasts showing return of bullish market
November 20, 2024 • Author: Richard Bradstock
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A Strong and stable uk property market has been forecasted
It’s been a bit of a bumpy ride for buy-to-let investors since 2020 but for those who have ridden the storm, reports from both JLL and Savills last week, suggest investors will be duly rewarded for their perseverance. A key takeaway is the return of strength and stability in the UK property market, a direct path away from the rollercoaster ride of the last four years - and of course, some extremely enticing forecasts for growth for those looking to invest.
What is playing into this market positivity?
Inflation Tracking Down
Base Rate Tracking Down
Established UK Government With A Strong Majority And Mandate Committed To House Building
Competitive Mortgage Rates
RICS Survey Registering Positive Growth For New Buyer Enquiries And Available Stock
2024 House Prices Exceeding Initial Growth Forecasts
Most Recent Stats Showing The Highest Growth In Prices Post Pandemic Since November 2022
The National Outlook
Current Annual House Price Growth
+2.4%
2025 House Price Predictions
+4%
+3%
The most recent stats show that annual house price growth in the year to October was 2.4%, 20 percent higher than what was forecasted. Savills predicts 4% growth in prices nationally in 2025, with London on 3% - the capital more conservative than the national average because of the affordability gap.
Projected Property Price Growth by 2029: Savills vs. JLL
Cumulatively, Savills forecast mainstream house prices in the UK will rise by 23.4% by 2029, with the biggest annual increases coming in 2026 and 2027 at 5.5% and 5% respectively. JLL is markedly more cautious with a 19.9% growth forecast by 2029, but do concur that 2026 and 2027 will be bumper years for growth, based on how much further into the rate cutting cycle we will be.
A Capital Pop
Projected Property Price Growth in London by 2029
Savills have released a blanket figure for London at 17.1% growth by 2029, however, JLL has singled out Greater London where it expects prices to increase by 21.6%, which contrary to the norm of recent years puts London outperforming the national average and showing somewhat of a bounce back in the capital. JLL sites the lack of new homes in London’s pipeline which will drive prices more steeply and for which the pinch will be particularly felt over the next five years, that is until the effects of the new government housebuilding programme kicks in easing the supply-demand issues across London and the South East.Makes sense.
Mad on Manchester
Projected Property Price Growth by Region (2024–2029)
Manchester, or the North West, is the absolute standout star. Savills estimate a five year growth in house prices nearly topping 30% - a 29.4% increase in the five years to 2029. Wild, but also totally credible as with higher lending rates buyers have and will continue to gravitate to more affordable regions, thus driving prices upward. In fact, the entire North of England will see the highest increases in property prices - see the table below - with Birmingham and the West Midlands in fourth place at 26.4%.
rental market
In the five years to September 2024 UK rents rose nationally by an astonishing 27% according to JLL. And this is a national average that doesn’t even show the full picture of regional rent rises in the likes of Birmingham and Manchester which we would estimate as much higher.
But what of rents over the next five years? It’s true we’re reaching a rental affordability ceiling that comes with the cost of rent having exceeded the rate of wage and inflation growth and a period of stability – or even a plateau is certainly not a bad thing. But no plateau is in sight.
UK Rental Growth Projections by 2029
Driven by shortages in rental properties Savills predict average UK rent will rise by 17.6% by 2029, JLL a smidge less at 17%. JLL forecast stronger rental growth in Greater London at 18.8% over the same period. The biggest jump in rents will be witnessed in 2025 with a 4% rise (Savills), which, ahem, *cough cough* is next year! We currently have newly completed investment properties for sale in Birmingham so it’s not too late to get on this radio rental bandwagon now.
JLL’s report delivered an excellent dose of reality and a timely refresher, reminding us that in early 2020, five-year rental growth figures sat around 12%, showing just how ‘freak’ rental growth continues to be. If a lack of new stock remains an issue it’s doubtful the rate of rental growth will ever get back to low double digits again. Who knows?
A seminal shift
Last week’s UK property market forecasts certainly seem to mark a seminal shift away from the doom, gloom and reticence of recent years. If you’re up for a 29.4% increase in the value of your investment over five years then check out our Manchester developments.
What are you waiting for?
The sooner you invest in the UK property market, the bigger the rise.
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About the author
Founder & Managing Director
richard bradstock
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.
