Struggling home-owners in London are expected to enjoy a bit of breathing room in the next three years. However, the long-term seems to be geared towards a price bump.
Prices for homes in the northern part of the country are most likely to outperform the prices in London as well as the properties in the South East. This is a development that is likely going to be a reality in five years time if the recent price forecast from leading experts in the property market is to be considered.
Further increases in interest rates in relation to Bank of England’s base rate increase of 0.25% are likely to challenge affordability to buyers in areas where the house prices are significantly higher than the buyers’ income.
Short-term lull due to Brexit uncertainty
The prices of houses in London have seen a rise of up to 70% just n the last ten years alone. This is more than triple times faster in the country. This pushed the average pricing for houses in 2017 to £479,000 based on the data that Savills has gathered from its recently carried out research.
Compared to average income, this is 12.9 times higher. Property buyers in the capital who are first-timers are paying an average deposit that is only a little short of £100,000. Compared to the average that the rest of the UK is paying, this is about four times more. As a result, it does not come as a surprise that many Londoners, even those who are earning quite high, are now finding themselves having a hard time affording the costs involved in buying homes. This means that growth prices for houses will likely be most impacted here.
Savills is also anticipating a 1.5% fall in prices for this year alone. The next year is expected to see a further slide of 2%. The forecast, however, sees the price stagnating for the year 2019 as a result of the prevailing uncertainty following the country’s exit from the EU.
The forecast predicts £33,000 will be added to prices for hoses in the country’s capital in five years time. A boost of five percent is also anticipated to take place in 2020 which is the year that the country will officially exit the EU. However, this is only going to take place if wage, GDP, and employment will grow based on expectations.
This will then put average house price in the capital to over £500,000 by 2022. The housing market in the capital has been trying to push against affordability and mortgage regulation for a considerable time now according to Lawrence Bowles, a research analyst at Savills. Ultimately, it was the Brexit vote that became the tipping point which led to the slow-paced price growth.
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