House prices will rise by an average of £61,500 over the next five years according to estate agency Savills, after revising its prediction upwards from six months ago.
According to Savills, the average home value in Britain is expected to rise by 21.6 per cent by the end of 2028.
The estate agency has revised that forecast, from 17.9 per cent in November last year.
It has also revised its annual forecast, which now stands at a 2.5 percent increase by 2024.
Savills had previously expected house prices to fall 3 per cent this year, but made the revision due to falls in the cost of mortgage debt.
Savills has published its five-year house price forecasts for major properties in Britain
Savills suggested the number of housing transactions would reach 1.05 million this year, slightly above the 1.01 million forecast at the end of last year.
However, he said the property market remains sensitive to short-term fluctuations in the cost of debt and political uncertainty in the run-up to the general election.
Savills’ Lucian Cook explained how the outlook for house prices has improved since the agent’s previous forecast last November, as mortgage costs have “come down slightly”.
He added that mortgage costs were now “much less volatile”.
Mortgage rates have been volatile over the past two years, Moneyfacts data reveals
Cook said: “Economic growth prospects have also improved slightly, pointing to relatively modest house price growth this year, with further potential in the coming years.”
It suggested that in November, buying a property with a 25 per cent deposit within two years could cost 5.34 per cent.
By contrast, that same mortgage would now cost 4.84 percent, while a five-year solution could cost 4.5 percent, according to Cook.
Savills now says house prices will rise by 2.5% this year, having said last November that they would fall by 3% in 2024.
| General UK House Price Forecasts (2024-2028) | 2023 (actual) | 2024 | 2025 | 2026 | 2027 | 2028 | Total (2024 to 2028) |
|---|---|---|---|---|---|---|---|
| Average house price in the UK (%) | -1.80% | 2.50% | 3.50% | 4.50% | 5.00% | 4.50% | 21.60% |
| Average house price in the UK (£) | £285,000 | £292,000 | £302,500 | £316,000 | £332,000 | £346,500 | £61,500 |
| Housing transactions | 1.02m | 1.05m | 1.14m | 1.16m | 1.16m | 1.16m | – |
| Bank Base Rate at the end of the year | 5.25% | 4.50% | 3.50% | 2.50% | 2.00% | 2.00% | – |
| Nominal income growth* | 7.40% | 2.70% | 3.50% | 3.20% | 2.90% | 3.10% | 16.40% |
| Real GDP growth | -0.20% | 0.60% | 2.00% | 2.00% | 1.60% | 1.60% | 8.90% |
| Source: Savills |
He said: ‘The higher cost of debt dampened demand and put downward pressure on prices.
‘However, the highly competitive nature of the mortgage market has meant that lenders have priced the prospect of bank base rate cuts quite aggressively, causing buyer confidence and prices to recover to some extent. .
“This has caused monthly mortgage approvals to exceed 60,000 in February and March, with annual house price growth of 0.6 per cent at the end of April.”
| 2024 | 2025 | 2026 | 2027 | 2028 | 5 years until 2028 | |
|---|---|---|---|---|---|---|
| United Kingdom | 2.50% | 3.50% | 4.50% | 5.00% | 4.50% | 21.60% |
| northwest | 4.00% | 4.50% | 5.50% | 6.50% | 5.50% | 28.80% |
| Yorkshire and the Humber | 3.50% | 4.50% | 5.50% | 6.50% | 5.50% | 28.20% |
| Welsh | 4.50% | 4.50% | 5.00% | 5.50% | 4.50% | 26.40% |
| Scotland | 4.00% | 4.00% | 5.00% | 5.50% | 5.00% | 25.80% |
| Northeast | 4.50% | 4.50% | 4.50% | 5.00% | 4.50% | 25.20% |
| West Midlands | 2.00% | 4.00% | 5.00% | 6.00% | 4.50% | 23.40% |
| East Midlands | 2.50% | 4.00% | 4.50% | 5.50% | 4.50% | 22.80% |
| South west | 1.00% | 3.50% | 4.00% | 4.50% | 4.50% | 18.70% |
| Southeast | 1.50% | 3.00% | 4.50% | 4.50% | 3.50% | 18.20% |
| East of England | 1.00% | 3.00% | 4.50% | 4.50% | 4.00% | 18.10% |
| London | 2.00% | 2.50% | 2.50% | 3.50% | 3.00% | 14.20% |
| Source: Savills |
However, Cook went on to say that continued uncertainty in the Middle East and higher-than-expected US inflation have meant that swap rates (on which lenders base their fixed rates) have continued to rise.
He said: “Consequently, we are unlikely to see a further significant fall in mortgage rates this year, with the potential for short-term fluctuations in the cost of debt and house prices, as seen over the past week. “.
“Similarly, an autumn election could affect confidence towards the end of the year, although surveys suggest that most buyers and sellers will have already factored in a change of government, which will minimize the impact,” he concluded.
Homebuyers will face increasing pressures around affordability, particularly in the “already strained markets” of London and the South East, Savills says.
Savills suggested affordability issues will become a factor towards the end of the next five-year period, particularly in the “already strained markets” of London and the South East.
While substantial house price growth is expected to exceed £60,000 over the next five years, there are regional variations.
In some areas, Savills predicts they will rise by 28.8 per cent, such as the north-west, while in other areas, such as London, they will rise by half that amount, 14.2 per cent, in the next few years. five years.
The North West is followed in the rankings by Yorkshire and the Humber, which is just behind at 28.2 per cent.
Void the real estate market at your own risk
Wales and Scotland are also expected to do well, with price growth of around 26.4 percent and 25.8 percent respectively.
North London estate agent Jeremy Leaf said: “These are particularly interesting figures which suggest an improving outlook for the UK property market as they come hot on the heels of the forecast that the UK will be the next economy. slowest growth of the richest G7 countries this year.
‘Override the real estate market at your own risk. Continued resilience may surprise many, but not those of us who work at the forefront. Despite lingering cost-of-living concerns and a slower-than-expected fall in the base rate, underlying housing demand remains strong.
“However, improved options mean that only realistic sellers will be able to take advantage of them, although some prices may fall at least in the short term.”
