This month we are looking at what’s happening in the UK Property market.
Savills are predicting in a recent report more growth to come in 2021 and a soft landing in 2022 with UK mainstream house price growth forecast +9% in 2021.
The average UK house price has continued to rise strongly in 2021, increasing by +5.6% in the first six months of the year according to the Nationwide index.
The signs are the market looks set to maintain growth for the second half of the year meaning Savills expect annual house price growth across the UK as a whole to end 2021 at 9%, and with transactions to exceed 1.6m for the first time since the credit crunch
Savills also expect transaction levels to diminish gradually over the remainder of this year as government support for both the housing market and the wider economy is withdrawn. However, the pace at which sales continue to be agreed suggests that national transaction levels will still end the year at circa 1.62m.
That is roughly 35% higher than the average for the five years prior to the pandemic, despite an acknowledged shortfall of available supply to meet demand.
A soft landing seems likely. The pace of economic recovery means unemployment levels have been contained and are forecast to progressively return to pre-pandemic levels and Interest rate rises are still expected to be gradual and modest, meaning a progressive squeeze on affordability.
Together, Savills believe, this means there does not appear to be a trigger for a major house price correction.
Ultimately, the pattern of growth over the period 2022–2025 depends on the extent to which the market normalises and what this means for price growth next year.
While at this point, we are forecasting price growth of 3.5% next year, we could still see some of the growth generated by the extraordinary market conditions of 2020 and 2021 unwind at times during 2022.
Regionally we continue to expect the markets of the Midlands and the North of England to show the strongest price growth as has occurred historically at this point in the housing market cycle, due to greater capacity for growth before hitting affordability ceilings.
However, in the short term, we do expect some of the buyer focus to shift back towards urban markets, including London, as social distancing restrictions and international travel restrictions ease.
This will see the ratios of regional to UK average values slowly converge over the next five years, as the lower value regions see stronger growth, ‘catching up’ with the rest of the country. This is what we’d consider typical late cycle behaviour.
At the end of the day house prices and yields, have traditionally increase over time in England, with a stable economy and government. The World looks to invest here, and this will likely continue.
Global Investments offer several ‘off plan’ and ready property investments in the Midlands and the North of England including apartments in Liverpool, Manchester, and Birmingham, some with guaranteed returns.
Also on offer are Freehold Houses in the Northeast, refurbished and offered to market with tenants in situ.
If you are interested in investing in UK Property and would like to know more, please contact us.
Source: Savills Research using Land Registry and Nationwide
