Savills predict 25% increase in average prices

In its five year forecast agent Savills has predicted average prices will grow 25% over the next five years with a 17% increase in the next three years alone.

The analysis from Savills suggests that the South and East of England will overtake London as the top performing regions.

They believe that as confidence improves, buyers are likely to look to markets beyond London that offer better relative value.

Savills also expects transaction levels in the market to increase by 27 per cent over the five years.

They predict that in the short term Help to Buy is likely to increase transaction levels by around 12 per cent per annum, but that transactions will fall back once the scheme ends.

Lucian Cook, Savills head of UK residential research, said: “We see no evidence of an imminent housing bubble and think it an unlikely prospect. For a bubble to occur we would need to see five year price rises of 35 per cent to 40 per cent and/or mortgage interest rates of around 7 per cent, which seems improbable.

“On balance, an earnings led price recovery remains the most likely outcome, with a continued squeeze on mortgaged owner occupation continuing to limit the recovery in market turnover and house price growth potential.”

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