But Savills’ five year forecast predicts strong growth in other areas
House prices in London will fall next year and not start to strongly recover until 2024, according to the latest forecast by Savills.
The high-end estate agent said it expected prices to fall 2% in the capital next year before beginning a slow recovery afterwards, ultimately delivering weak growth of just 4% between 2020 and 2024.
Savills also estimated that prices in London will fall this year, ending up 2.5% lower than 2018.
However, the firm’s five-year forecast, released today, also predicted prices would continue to rise strongly in much of the rest of the country.
The forecast predicted average house price growth across the UK of 15% between 2020 and 2024, with the Midlands and North showing the strongest rises.
Prices in the North-west are predicted to soar by 24% over the period, with prices in Yorkshire & the Humber also growing by more than 20%. Growth is forecast to be lower the closer you are to London, with both the East and South-east seeing likely growth of just under 11%, and the South-west growth of 13%.
The firm blames the low rises on affordability pressures in London, meaning the market cannot bear further increases, with areas of the North and Midlands seen as having more headroom for growth.
Lucian Cook, Savills head of residential research, said the firm anticipated a continuation of the recent trend for London and the South East to underperform markets in the Midlands and North. “This stage of the cycle appears to have begun in 2016, coinciding with the referendum, when London hit up against the limits of affordability,” he said.
“Markets further from the capital, such as Leeds, Liverpool, and Sheffield, were much slower to recover post financial crisis and have much greater capacity for house price growth relative to incomes, even as interest rates rise.”
The only part of the market to buck this trend is the prime central London market, which Savills says will reverse recent years of falls by recording 21% growth by 2024.
Savills said the forecasts assumed a slim Conservative majority after the election which enables delivery of Brexit under a withdrawal agreement in January next year.
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