Forecast Savills : UK property will rise by 17% over 5 years

Despite the sad beginning of the year, growth in property prices in the main markets in the UK in 2015 exceeded expectations and is now on the horizon again, the looming prospect of a rate hike by the Bank of England, designed to curb too rapid growth of prices.

The timing and pace of rate hikes by the Bank of England are due to economic growth in the regions . In turn, rates will influence the growth of real estate prices, ensuring the stability and sustainability of the market.

International real estate Agency Savills has published its forecast. According to the forecast , average property prices in the UK will increase by 17% by the end of 2020, being in the range from 21,6% in the South East of England and 12% in the northeast, despite the fact that mortgage rates will not exceed 4.5% . Any combination of high prices and high interest rates could deprive the British market buyers.

A lot will depend on how fast rates will rise. If rates will rise quickly, the price increase just as quickly falters. On the other hand, too slow a rate hike or the lack of it will pose a threat of too rapid growth in property prices of the Old world , which will reduce the overall availability of housing on the market. To find a balance – that’s the most important and difficult task for the Bank of England. Since last year, the risk of rapid price growth was leveled off by introduction of stress tests for mortgage lending is especially pronounced he was in London, where due to the increased prices people simply do not have enough income to obtain a mortgage.

It is expected that the planned downward trend in price growth in London will remain in the next 5 years, showing the average price increase at 15% by the end of 2020. Thus the rate of growth of property prices in London will lag behind the growth in property prices in the suburbs, which will gradually narrow the gap in housing costs between London and other regions.

However, the Savills report noted two areas of London – Walthamstow and Lewisham that will outpace other areas for growth as a driver of growth in prices for other parts of London.

Good price growth potential of the cities of Manchester and Birmingham, which is also expected rapid growth in property prices while maintaining good economic performance and employment.

And yet, according to Savills , the number of transactions on the real estate market will be far behind the norm. According to forecasts, by 2020 the market will be committed 1.3 million transactions per year, which is 0.1 more transactions than at present. Meanwhile, to achieve the required level of transactions, the market needs 1.7 transactions per year , this is the number of transactions it will be possible to meet all the needs of British residential properties.

® Maxim Savitsky. G. 05.11.2015

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