Regional house price growth to outpace London until 2024

House price growth in the regions is set to continue to outpace that seen in London over the next two years, according to new forecasts which predict that rates of growth overall will ease through to 2024.

The forecast by estate agent Hamptons predicts that prices will rise by 4.5% across the UK this year, ranging from 7% growth in Scotland to just 1.5% growth in Greater London. As well as Scotland, the North-east and Wales are also both predicted to see price growth in excess of 5% in 2021.

The firm said the “extraordinary” performance of the housing market over the last 18 months had “confounded expectations”, and it predicted that rates of growth overall will ease over the next three years in most regions following a peak this summer.

It said it expected house prices in Great Britain to rise 3.5% in 2022, 3% in 2023 and 2.5% in 2024 – equating to growth of 13.5% in total between 2021-24.

However, it said prices will rise by just 7% in that period in London, and will also be substantially lower than average in the east of England, the South-east and the South-west.

Hamptons said it expected prices to rise most quickly in the North east (21%) and Scotland (20%), but that Yorkshire and the Humber, the North west and Wales would also all see significantly above average price rises.

The most recent data on house prices from mortgage lenders suggests that while prices initially fell back in July in the wake of the ending of part of the stamp duty relief brought in last summer, they have remained firm since given the relative lack of homes on the market.

Hamptons said 2021 was on course to be the busiest year in the housing market since 2007, with around 1.5m transactions expected, well above the average of around 1.2m seen in recent years.

Last week the latest HMRC housing transaction figures showed that there have already been more than one million housing sales completed in the first eight months of the year – the first time this has happened so quickly since 2007.

Hamptons said it now expects transactions to continue at above the level of recent years until 2024, when it expects the current house price growth cycle to end.

Aneisha Beveridge, head of research at Hamptons, said the last year had seen a “huge attitudinal change towards property”, which could be attributed to the stamp duty holiday alone.

“People now place a higher value on their homes, having have spent more time in them than ever before. Flexible and remote working, which look set to continue, have encouraged households to make bigger moves.

“While we will see a degree of levelling up over the next few years, the gap between house prices in the capital and the other regions is likely to be wider than that seen at the end of the previous cycle in 2007,” she said.

The research came as rival estate agent Knight Frank reported a continued boom in sales of houses as second homes. The firm said official figures for stamp duty payments showed 24% of stamp duty revenue came from the higher rate tariff applied to the purchase of second homes, the highest proportion on record.

Mark Proctor, head of the South west region at Knight Frank said: “Being told to work from home has enabled people to realise their lifestyle ambitions via a second home, and with the equity that’s built up in the London and the South East property markets over the longer term, that five-year plan to buy a second home has come forward considerably for many buyers.”