House prices in London have risen by 72% over the last 10 years, leaving little wriggle room to rise further, Savills says.
The North-South house price divide could narrow over the next five years, a report predicts – with property values rising at a faster rate in northern England, Wales and Scotland than those across London.
According to estate agents Savills, house prices across Britain are expected to increase by 14.8% from 2019 to 2023. That would add about £32,000 to the average house, valuing it at £248,000 by the end of 2023.
While house prices in London are expected to rise by 4.5% between 2019 and 2023, the rest of the country could see double-digit growth. House prices in the North West are expected to rise 21.6%, Wales will see a 19.3% increase and Scotland will see 18.2% growth.
Savills believes stricter mortgage lending rules introduced following the financial crisis will limit house price increases – but new mortgage affordability rules will also help to protect the housing market from prices nosediving.
Lucian Cook, Savills head of residential research, said: “Brexit angst is a major factor for market sentiment right now, particularly in London, but it’s the legacy of the global financial crisis – mortgage regulation in particular – combined with gradually rising interest rates that will really shape the market over the longer term.
“That legacy will limit house price growth, but it should also protect the market from a correction.”
London, which has been seen as the engine of the housing market recovery, has seen house prices soar by 72% over the past 10 years – well ahead of any other region.
This leaves less wriggle room for house prices there to keep pushing upwards as people stretch their mortgage borrowing.
The report said that, outside London, key regional economies including Manchester and Birmingham which attract both local buyers and investors have the capacity to outperform their surrounding regions.
Here are Savills’ forecasts for house price growth between 2019 and 2023. Based on figures from Nationwide Building Society’s house price index, Savills has also calculated what the average house price could be by the end of 2023 if its projections for house price growth are correct:
:: North East, 17.6%, £147,100
:: Yorkshire and Humberside, 20.5%, £193,117
:: North West, 21.6%, £197,717
:: East Midlands, 19.3%, £222,392
:: West Midlands, 19.3%, £227,394
:: South East, 9.3% (within the South East, house prices in the outer areas including Brighton and Hove, Milton Keynes and Aylesbury could reach £305,885; and those in the outer London area which includes Reading, Slough, St Albans, Windsor and Maidenhead could reach £398,190)
:: East Anglia, 9.3%, £249,958
:: London, 4.5%, £489,628
:: South West, 12.6%, £276,359
:: Wales, 19.3%, £184,773
:: Scotland, 18.2%, £176,308