Where are UK property prices heading?
2021-05-10
Owning a buy-to-let
property isn’t just about yields; understanding the potential for capital
growth is also a key part of any property investment strategy.
So, what do the
experts say about property prices (and rental values) in the UK? Where are they
heading over the coming years and which regions are going to be the stars of
the show? Read on to find out…
Looking ahead to
2025
When it comes to
mainstream capital value forecasts, Savills provides one of the most trusted
projections in the industry. Revised twice every year, the company’s forecasts
are based on a wide range of factors, including recent and historic transaction
levels, economic projections, political factors, market trends and more.
The most recent
projections were released in March 2021, with Savills commenting:
“2021 will be a
complex year, with competing forces having different impacts on the housing
market over the course of the year. But government support, the easing of
social distancing restrictions, and low interest rates underpin our forecast
for 4.0% price growth.”
That 4.0% growth sets
the tone for the years to come, with Savills projecting it will increase to
5.0% in 2022. Overall, in the five years to 2025, the company forecasts
mainstream capital value growth of 21.1% for the UK as a whole.
The North West tops
the table – again
At a regional level,
that growth will vary significantly over the years ahead. Topping the chart is
the North West. The third most populous region in the UK and home to cities
including Manchester, Liverpool and Preston, the North West is forecast to see
growth of 28.8% between now and 2025.
“Many investors
have been opting for buy-to-let properties in the North West for some time now,
as the region has established credentials in terms of its property market
performance and wider economic backdrop. A centre for industry and dynamic
growth, the North West has plenty to offer investors looking for good value,
strong capital growth and solid yields.”
Speaking of yields…
Savills has also
included mainstream rental values in its latest five-year forecast. While UK
rents are forecast to rise by just 0.8% in 2021, the pace picks up
significantly in 2022, when a rise of 4.5% is anticipated.
Looking at the
longer-term picture, Savills projects that rents across the UK will increase by
an average of 17.0% in the five years to 2025.
What has happened
so far in 2021?
We’re already a
quarter of the way through 2021. That means that figures are available to show
how the UK property market has been performing so far this year.
Nationwide’s latest
figures show annual house price growth of 5.7% in the year to March 2021.
Again, we see the North West leading the pack, with price growth of 8.2% over
the same period.
“Regional
variations in house price growth show the value of doing your homework and
identifying the best UK region to focus on as part of your investment strategy.
All indicators are undoubtedly pointing to the North West right now.”
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