National house prices are now 16% above the peak of 2007, and new analysis from Strutt & Parker predicts that the next five years will see prices accelerate by a cumulative 18%.
Over the first three months of this year, country’s house prices have increased by 2.5% compared to the last quarter of 2017, according to figures from Nationwide, although London suffered a 1.1% slowdown. The top performer in England was the West Midlands with 4.8% growth, while Wales achieved a 6% increase and Northern Ireland prices rose by 7.9%.
Over the next two years, the latest predictions from Strutt & Parker forecast a property price rise across the UK of 2.5% per year, reaching 18% cumulatively by 2022, despite the cautious sentiment currently affecting the housing market.
However, the analysis forecasts that house price growth in prime central London will fall well below the national average, with between -5% and 0% growth by the end of this year, although the figures will pick up with a cumulative value rise of 23% between now and 2022.
Vanessa Hale, director of research at Strutt & Parker, said: “Whilst Brexit negotiations continue and political and economic conditions remain uncertain, we have held our residential house price forecasts for sales. We maintain that from 2019 onwards it is extremely difficult to forecast the housing market with any certainty, but we would expect some bounce back and a return to growth once more stability has returned to UK politics and the economy.”
Predictions for the lettings market
In prime central London, Strutt & Parker expects rental prices to remain flat for the rest of this year, with some growth returning to the market next year, after the first quarter results revealed that there had been an 11% drop in new tenancies in the capital compared to Q1 2017.
This fall in tenancies can be put down to reduced availability rather than demand, according to Kate Eales, head of residential lettings at Strutt & Parker, as some buy-to-let investors are returning to the sales market ahead of the predicted London slowdown.
“The tenants that are out there in the market are more discerning than ever and want the best on offer,” said Eales.
As property investors begin to divest their London stock, opportunities elsewhere across the country in the emerging markets of the north-west and the midlands are becoming more prominent, particularly for those who invest in off-plan developments and remain ahead of the market.
