The UK real estate could be headed for a major bounce back in the next five years, after months of plummeting prices. The crisis, which has now lasted across the country for several quarters, could not-so-long from now come to an end, this is according to a Wednesday report by Savills.
Savills is a brokerage and real estate adviser based in London and its recent report predicts a 15.3% price jump for existing UK homes between the year 2020 and 2024. The report further states that the growth may not be uniform across all regions; the North-West is likely to lead with a 24% growth, while the East and South-East may experience an average growth of 11%.
“We anticipate a continuation of trends seen historically, where London and the South East underperform markets in the Midlands and North,” the head of residential research for Savills, Mr. Lucian Cook stated in the report. “This stage of the cycle appears to have begun in 2016, coinciding with the referendum, when London hit up against the limits of affordability.
The Savills’ report, however, noted that London’s luxury market would undergo a significant upswing; prime central London could rise by 20.5% on average, starting with an increase of 3% within the next year.
“Historically, a recovery in the prime markets has been sparked in prime central London, when the city’s most expensive properties start to look [like a] good value on a world stage,” Mr. Cook said in the report. “Values have been bottoming out over the past year, resulting in a build-up of new buyer registrations over recent months. Both signal that the market is set for a bounce, but this is being held up by uncertainty.”
In areas outside London, prime property prices could rise by about 14.2% by 2024 while luxury homes outside central London are expected to increase by 11.5%, the report indicated.
Scotland could experience a 20% jump in prime property prices, with units in North of England and Midlands expected to hike by 20.5%.
Rental rates are also set to rise within the next five years; in London, renters can expect a spike of about 18.8% even as annual transactions are expected to remain almost constant at 1.2 million.
But Cook warned that the growth could be slower than in the previous periods due to increased taxes and interest rates.