Savills reported in November 2018, that it is expecting the number of residential property transactions in the UK to remain stubbornly low over the next five years amid Brexit uncertainty. Five-year forecasts released by the agent were based on a drop in sales volumes of 6.9% since the Brexit vote and it said that transactions fell from 1.61m in 2007 to around 1.14m last year. Savills expects the level of annual property transactions to remain at this lower level until at least 2024.
The firm also predicted that first-time buyer volumes will fall 2.7% overall during the next five years. The forecast is even less positive for buy-to-let investors with Savills predicting a 23% drop in activity by 2023 – which will in turn push rents up by 13.7% during the same period. It also thinks the Bank of England base rate will have increased to 2.8% by 2023, while average national salaries will be 16.9% higher by then.
Thanks to rising property prices in recent years and stagnant wage growth, Savills claims that affordability rather than Brexit is a bigger issue facing the UK housing market. However, that is only true in the southern regions of England and in this article we will look at why there is a strong case to be made that the rest of the UK will see property prices outperform the capital for years to come.
The most interesting part of the forecast was reserved for the property price predictions by region and Savills expects the highest price growth in the lower value markets such as the Midlands, the north of England, Yorkshire & Humberside, Scotland and Wales – particularly in areas that are still recovering to reach their peak values since the financial crisis – making these regions more affordable and providing room for loan to income ratios to increase.
The forecast predicts that UK house prices will rise by 14.8% from 2019-2023 and the biggest growth will be in the northwest at 21.6%, while London will lag at just 4.5% over the next five years, Savills said.