Presuming the Conservatives win a big enough majority to get the Brexit deal over the finish line by 31 January 2020, new research from Savills predicts the UK will not only avoid an economic recession but the average price of a UK home will rise by 15 percent over the next five years.
The Conservatives winning a majority and Brexit happening by 31 January are two big presumptions, right there, considering this year’s ups and downs! In fact, the research team at global estate agency firm Savills found that preparing their Residential Property Forecasts was ‘no easy feat’ this year with so much uncertainty surrounding the UK’s exit from the EU.
“Amid Brexit uncertainty, fixing the assumptions on which to base them has been like nailing jelly to a wall.”
Lucian Cook, head of residential research said of writing the firm’s Residential Property Forecast report.
With annual house price growth of just 0.4 per cent up to October 2019, this year has certainly not alluded to Savills’ predicted property boom. Even next year, post-Brexit, Savills’ forecast is for just one per cent growth as market uncertainty continues as we negotiate our trading relationship with the EU during the transition period (should we even be at that stage by then).
It is in 2021 when Savills predicts confidence will return to the UK economy with more certainty over our future trading relationships and improved wage growth acting as a stimulus for housing demand boosting growth by 4.5 per cent in 2021, then by three per cent in subsequent years 2022, 2023 and 2024.
Although Savills predicts that the average UK house price will rise by 15 per cent by 2024, its expert team expects to see significant differences in regional growth. For example, the North West of England is expected to see increases of 24 per cent, with Yorkshire and Humber following closely behind with predicted growth of 21.6 per cent while London property prices are expected to see a two per cent fall next year followed by a small four per cent rise over the five-year period.
Central London’s prime property market to grow by 20.5% over the next five years
Although London, as a whole, is expected to see only a modest +four per cent growth, Savills forecasters predict that Central London’s prime property market will grow 20.5 per cent over the next five years taking prices back up to their 2014 peak. Savills’ research team put this predicted recovery in prices down to their belief that the Conservatives will win a slim majority in parliament at next month’s general election meaning Brexit will finally happen while the low price of sterling will draw in foreign investment once more.
Average UK rents to rise by 15.4% over the next five years
Another headline figure from Savills’ research shows UK rental prices will continue to grow over the next five years, with UK-wide growth of 15.4 per cent and London rental prices increasing by 18.8 per cent. Good news you might think, however, the reason for this growth is predicted to be due to a fall in rental property availability (especially in the higher value and lower-yielding markets) as landlords are pushed out of the sector by increasingly restrictive government policies and fewer tax breaks meaning less profitability.
Obviously, Savills have made some very defined assumptions to come up with these figures, so if the Conservatives don’t win a healthy majority or Brexit doesn’t happen in January, then these figures will certainly need to be revised.
“The outlook could change quickly if circumstances dictate that we need to revisit our underlying assumptions,” Savills Research confirms.