UK house prices are forecast to rise by an average of 15.3% over the next five years, but there is significant variation between regions.
The latest research from national and international property agents, Savills, says that the fortunes of the property sector are about to make a turnaround - but only in some areas.
At a national level, Brexit and election-related angst will continue to act as a drag on the market over the short term, but the firm expects prices to rise broadly in line with incomes thereafter.
In the East Midlands, Savills' five-year price forecast shows that while the average house price in 2019 stands at £194,000 by 2024 the average house price will be £229,000. It is estimated that total growth for the five-year period in our region will be 18.2%.
Chris Charlton, head of residential sales at Savills Nottingham, said: "The growth forecast for the East Midlands is a very positive sign.
"Whilst many other parts of the country have seen significant growth over the last decade, particularly across London and the South East, the East Midlands hasn’t benefited to the same extent, so we’ve got real scope for growth.
"The key fundamentals of relative value, connectivity and quality of life and increasing levels of high quality stock are resulting in enquiries from around the country.
"Connectivity is key to the region’s success with the East Coast Main Line providing ease of access to London from Grantham and Newark, as well as East Midlands Railway serving Loughborough, Nottingham and East Midlands Parkway, driving demand for these locations and surrounding villages such as Southwell and villages along the A46 corridor including East Bridgford."
The North West is forecast to see the strongest price growth (24.0%) between 2020 and 2024, reflecting the strength and diversity of the regional economy and the capacity for higher loan to income borrowing, followed by Yorkshire and the Humber (21.6%). Wales and Scotland will also perform strongly, with price growth around 18% and 20% respectively.
Average house prices are expected to increase by just 11% across the South and East of England and 4.0% across Greater London having outperformed the rest of the UK in the 7.5 years leading up to the referendum according to Nationwide.
Prime central London, where median values stand at just over £2.75 million, is forecast to be one of the strongest performing markets, reversing a trend seen over the past five years.
Lucian Cook, Savills head of residential research, said: "We anticipate a continuation of trends seen historically, where London and the South East 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.
"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.”
These forecasts assume the election does not result in a significant shift in policy environment, that the UK ultimately achieves an orderly exit from the EU over the course of 2020 and avoids recession. They also assume that the bank base rate increases gradually to 2% by the end of 2024, constraining mortgage affordability and therefore house price growth.
With the General Election approaching we want to give you all the results and reactions as they happen. Join our new WhatsApp service to receive breaking news alerts throughout the night by texting ELECTION to 07790586202. The first messages will go out December 12 after polls close.
