Savills have released a new report on the UK property market which states the house price growth will continue to accelerate across the UK.
The property firm forecast an average of 17% annual property price rises by the end of 2020. This is based on the continuance of current trends over the past decade. They believe that the South East will continue to lead the price growth, with predictions of 21.6% growth in 2020. On the lower end of the spectrum, it is believed that the South East and North East will see price rises at around 12%.
These figures for property price growth are well over the predicted figures for UK wage growth, indicating the perpetuating divide between incomes and property prices. Currently, wage growth levels are barely 3% – and that has been cause for celebration. When compared to predicted property market growth of over 20%, the difference is staggering. Affordability issues could become an even more problematic issue in the years to come, especially for first-time buyers, who are having to buy property at ever increasing ages.
Especially contentious is the fact that much of the property price growth, particularly in the capital, is dominated by boroughs which have typically been viewed as more affordable. Areas which are already prime property are expected to have lower price growth. Typically affordable areas are becoming more expensive as demand soars for cheaper housing. Areas such as Waltham Forest, Lewisham, and Havering are all going to see price rises of around 20%, according to Savills predictions. These hotspots may soon stop being affordable havens. Affordable housing is being pushed further and further outside of the capital as gentrification occurs. This interactive map by The Telegraph is useful to understand which boroughs will see the greatest price rises in London by 2020.
‘…these high figures for property market price growth all rely on the assumption that the interest rate will remain the same until 2020.’
However, these high figures for property market price growth all rely on the assumption that the interest rate will remain the same until 2020. Currently, this does seem possible. Mark Carney, the Governor of the BoE, has just dampened prospects of a rate increase, due to low levels of UK inflation and weakened global growth. Nonetheless, with predictions for inflation to rise above the target of 2% within 2 years, together with house price inflation well above the rate of inflation, it seems fairly possible that the rate will be increased by 2020.
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