Average UK house price could reach £370,000 in next five years says Savills

Property group Savills predicts that average house prices across Britain are set to exceed £370,000, with some properties rising by more than £40,000, in the next five years.

In addition to sharp increases, research suggests that the north-south divide in property prices will also shrink over the next five years, with high prices in the south being subject to affordability initiatives, to ensure that people aren’t priced out of certain areas. London is however still expected to come top, as the area with the highest average house prices in 2026.

The full list of Savills predictions is below.

Region 2021 average Percentage increase 2026 average
North-west £229,572 18.8% £272,732
Yorkshire and the Humber £224,257 18.8% £266,417
Wales £212,912 18.2% £251,662
North-east £181,001 17.6% £212,857
East Midlands £252,943 15.9% £293,160
West Midlands £264,697 15.9% £306,784
Scotland £198,998 15.9% £230,639
South-west £341,971 13.1% £386,769
South-east £435,056 10.4% £485,553
East of England £380,685 10.4% £420,276
London £676,124 5.6% £713,987
Britain £327,838 13.1% £370,785

Lucian Cook, head of residential research at Savills, commented on the predictions:

“With the prospect of inflationary pressures persisting into next year, bringing forward the first anticipated interest-rate rise, we expect price growth in the near term to be somewhat more muted than we have seen of late.”

He also said that with gradual interest-rate rises expected, Savills expect “the mortgage regulation introduced back in 2014 to show its hand more clearly over the next five years” and that “stress testing of affordability has meant that existing borrowers are unlikely to get into financial trouble as rates creep up”.

But, said Cook,

“it will cap how much new buyers can borrow relative to their income in a higher interest-rate environment, acting as a drag on both prospective price growth and market activity over our forecast period”.

Lawrence Bowles, director of residential research at Savills, commented on the closing of regional differences indicated by the predictions:

“Given where we are in the housing market cycle, the north-south divide in house prices looks set to close further over the next five years. There remains more of an affordability cushion beyond London and the south. The Government’s levelling up agenda has the potential to accelerate a rebalancing of the market, but only if it gains meaningful traction.”

Bowles continued:

“The potential for price growth looks more constrained in the London mainstream market, which has become increasingly confined to more affluent households. This reflects the extent to which London prices became dislocated from the rest of the UK housing market through strong price growth from 2005 to 2016, something so pronounced it is expected to still limit price growth across large parts of the capital a decade later.”

Frances Clacy, research analyst at Savills, also commented:

“We’ve already seen the beginnings of this recovery, primarily driven by demand for larger houses and, as such, by locations such as Notting Hill and Holland Park. But renewed demand for flats during the second half of 2021, particularly from those looking for a pied-a-terre, suggests growth is likely to become more balanced, both in terms of location and property type, going forward.”

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