Savills Release Optimistic Forecasts for the Property Market
Property experts Savills have just released their five-year residential forecasts covering prime and mainstream UK housing markets.
According to Savills’ head of residential research, the UK housing market outlook is past its ‘peak pain’, and there will be a return to growth in 2025. They believe interest rates have likely peaked, and the worst dips in house prices are over.
These predictions depict potential growth figures for each year from 2024 to 2028 for the UK property market and also break them down by region, allowing for easy comparison.
Prime market refers to the most desirable property on the market, consisting of the top 5% most expensive properties, while mainstream makes up the bulk of the UK housing market.
According to the forecast, the outlook is optimistic for both prime and mainstream UK markets, looking forward to 2028.
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What Will Happen in the UK Property Market in the Future?
The mainstream capital value forecast states there won’t be much growth in the short term, but there will be a return to healthy growth in the next few years.
As stated by other reports, such as Halifax’s recent house price index, the recent decline in house prices looks set to continue into next year, and Savills agree with this assertion. The overall UK forecast for 2024 shows negative growth of -3.0%, and all UK regions are also set to register varying amounts of modest negative growth.
|2024||2025||2026||2027||2028||5 years to 2028|
|UK Mainstream Capital Value Forecast||-3.00%||3.50%||5.00%||6.50%||5.00%||17.90%|
Source: Savills Residential Market Forecast, Nov 2023
However, this seems likely to turn around in 2025 with a return to modest positive growth. More substantial increases are expected to continue from 2026 onwards, culminating in an optimistic 17.9% growth over 5 years.
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Northern Regions Set to Keep Ahead of the South
A recent trend has shown that capital value growth is stronger in the North than in the South.
According to Savills’ property report, this is likely to continue, with the North East, Wales, the North West, and Scotland all outperforming more southern regions with over 20% compound growth over 5 years to 2028.
|North East||Wales||North West||Scotland||South East||London|
|Mainstream Capital Value Forecast - 5 Years to 2028||21.40%||21.40%||20.20%||20.20%||16.70%||13.90%|
Source: Savills Residential Market Forecast, Nov 2023
At the bottom of the table, Savills believes London properties will see 13.9% capital value growth leading up to 2028, which, whilst still an optimistic projection, means that capital is likely to see less growth compared to more affordable regions. Read the latest London property investment guide for more indepth knowledge.
Overall, these figures show more promise than the forecast for last year, in which the most optimistic-looking regions, such as the North West, were predicted to hit 11.7% growth by 2027.
This figure has risen to 20.2%, showing that the current subdued property market is not predicted to continue in the next 5 years.
In 2023 and 2023, property prices will likely remain low in the short term, making now a good time to invest to see more capital growth over the next few years.
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Which UK Region is the Best for Investing in Property?
Looking at Savills’ predictions, northern UK regions, along with Wales and Scotland, all show a similar growth trajectory over the next 5 years. Given these slim margins of difference, it can be difficult to know which areas are likely to be the most lucrative.
Capital value growth is just one aspect of a successful property investment.
In fact, most experts will advise avoiding choosing a region with a higher projected percentage if there is less rental demand and a lower potential for rental growth.
The North West is one of the top regions for consistent capital value growth, according to Savills’ latest report, as one of the regions with the highest predicted growth figures between 2025 and 2027. This leads on from last year’s forecast, which placed the North West joint-first for growth out of all UK regions, suggesting resilience and consistency moving forward. Why not read the latest guide with the RWinvest Stoke on Trent Buy to Let guidebook?
This prospective trend aligns with projections for the future economic growth of major North West cities thanks to successful UK regeneration projects and ongoing investment.
Outside of capital value growth forecasts, the region has a demonstrably high rental demand and rental growth, making it a top pick for property investment now and in the coming years.
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