House prices expected to rise sharply over next 5 years

Residential property prices across parts of the UK could rise by more than £50,000 over the next five years, although much will depend on the direction Brexit negotiations take, according to Savills.

The estate agent forecasts that the average price of a home in the UK will rise by 13% by the end of 2021, up from their current level of £214,000 to £242,000, led by gains in the South East of England where prices are expected to rise by 17%, from £313,000 to almost £366,000.

In percentage terms, the East of England is expected to see the biggest rise in prices, up 19% between now and 2021. But a lower existing average home price there of £273,000 means this translates into a slightly lower monetary increase of £51,000 to £324,000 by 2021.

The house price rises that are predicted will be lower than those recorded across the country during the previous five years. Between 2011 and 2016 average home prices across the UK rose by £47,900, said Savills, which believes that the level of growth in the next five years will largely depend on Brexit negotiations, and in particular the impact that it has on the mortgage market.

Lucian Cook, Savills UK head of residential research, said: “Brexit has forced the market to change gear and created uncertainty.

“The period of negotiation with the EU is likely to be a rollercoaster of confidence.

“Buyer sentiment across all sectors of the market is likely to be fragile during the period of negotiations to leave the EU.”

The experts at Savills also expect the rental market to slow next year due to the effects of Brexit, but rental values are expected to rise at a faster rate than house prices over the next five years.

UK MainstreamAverage current5 year growthForecast Dec 2021
South East£313,00017%£366,200
East of England£273,00019%£324,000
South West£239,00014%£272,800
West Midlands£176,00013%£198,000
East Midlands£171,00014%£194,200
Yorkshire & Humberside£147,00010%£161,300
North West£147,00012%£164,600
North East£122,0009%£133,200

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Written by: Houseladder