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Savills Predict House Price Growth This Year in U-Turn Forecast Revision

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    Strong Start to 2024 Suggests Better-Than-Expected Growth in UK Property Market

    After a challenging year in 2023 for the property market, most experts agreed that the UK average house price would see further small dips in 2024. However, after an unexpectedly strong start to the year, many predictions are being upgraded to reflect the resilience of the mainstream residential market.

    In November last year, Savills predicted that house prices would fall by -3.0%. Now, thanks to a more promising first quarter than anticipated and an observed improvement in lead indicators of demand, Savills have revised their projections, forecasting growth of 2.5% in 2024. Falls in the cost of mortgage debt are also a factor in this revised projection. This analysis is promising news for the buy-to-let properties for sale and the property investment sector.

    Lucian Cook, head of residential research at Savills, said: “The outlook for 2024 has improved since our last (November 2023) forecasts as mortgage costs have nudged down slightly and are much less volatile. The outlook for economic growth has also slightly improved, pointing to relatively modest house price growth this year, with greater potential over the following few years.”

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    How Has This Affected the Five-Year Forecast?

    In light of this improved outlook, Savills has also taken another look at its five-year forecast for the residential market. They now expect UK property prices to rise by 21.6% leading up to 2028. This prediction is up from 17.9% in their previous forecast.

    UK Mainstream Capital Value Forecast202420252026202720285 Years to 2028
    Previous Forecast-3.0%3.5%5.0%6.5%5.0%17.9%
    Revised Forecast2.5%3.5%4.5%5.0%4.5%21.6%

    Source: Savills Residential Market Forecast, Nov 2023 and May 2024

    The improvement in expected growth means they also believe the average UK property price will surpass £300,000 in 2025. The average in 2023 was £285,000. Savills expects the average value to hit £292,000 in 2024 and £302,500 in 2025. In the five-year forecast, they have predicted an average house price of £346,500 in 2028, an increase of £61,500 compared to 2023.

    Savills have also slightly upgraded their housing transactions forecast for 2024. They initially predicted 1.01 million transactions towards the end of last year, but revised projections expect 1.05 million in 2024, indicating that they anticipate more activity in the market this year.

    A more robust economic performance in the UK is expected in 2025 and 2026, and Savills believe this will positively affect buyer sentiment.

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      North West Property Projected to Grow Twice as Fast as London

      The regional breakdown also shows some significant differences from the previous forecast.

      The North West is now at the top of the table with projected growth of 4% this year and 28.8% in the five years to 2028 – considerably higher than the UK average. This is also substantially higher than the region’s previous forecast of 20.2%.

      Mainstream Capital Value Forecast - 5 Years to 2028North EastWalesNorth WestScotlandSouth EastLondon
      Previous Forecast21.4%21.4%20.2%20.2%16.7%13.9%
      Revised Forecast25.2%26.4%28.8%25.8%18.2%14.2%

      Source: Savills Residential Market Forecast, Nov 2023 and May 2024

      The North-South divide is still evident, with northern regions displaying higher growth predictions than the southern areas. Savills believes that northern regions, Wales, Scotland, and the Midlands will all experience growth of over 20% in the coming years, while Southern areas and the East of England will grow at a slower pace of less than 20%.

      While London’s forecast has improved significantly from the former prediction of -4.0% negative growth in 2024 to positive growth of 2.0%, the longer-term growth is still believed to be slower than other regions. Therefore, London is still at the bottom of the table with 14.2% projected growth leading to 2028, only up marginally from the previous forecast of 13.9%. Buy-to-let in London has historically been a popular investment choice but has recently become less appealing than in northern regions.

      This means that the anticipated growth for the North West of 28.8% is more than double the figure for London, suggesting that this extreme North-South divide isn’t likely to diminish any time soon.

      To learn more about the UK property market, take a look at some of our dedicated area guides, covering topics such as investment property available in Maidstone and Hartlepool investment properties.

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      Jessica Ferris

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      Jessica is a property content writer at RWinvest. Keeping a close eye on the UK property market, Jessica helps our readers stay informed and up to date on the latest market news and statistics.