Savills: UK Housing Stabilization Ahead
UK’s prominent estate agency Savills, suggests that the UK's housing market has surpassed the worst and foresees a potential stabilization in prices by the upcoming summer. According to the agency's five-year outlook, the average UK house price is expected to decline by 3% in 2024, following a 4% decrease this year.
The housing market exhibited more resilience than anticipated in 2023, with property values estimated to be down a total of 7% from the autumn of the previous year to the end of 2023. Savills anticipates the Bank of England to commence interest rate cuts in the second half of 2024, reducing the base rate to 4.75% by the year's end, from the current 5.25%. The company forecasts a further decrease to 1.75% in 2027.
Despite the recent fluctuations, Savills projects a return to house price growth, with an increase of 3.5% in 2025, rising to 5% in 2026, 6.5% in 2027, and gradually slowing to 5% in 2028. The housing market's late-stage cycle is expected to result in slightly greater price declines in London and the south-east, with the north-east and Wales experiencing the strongest overall price growth in the next five years.
High-end real estate agency anticipates a bottoming out of prices in 2024, attributing the shift to declining interest rates, with a forecasted return to growth in 2025.
While Savills indicates a 20% decrease in overall property transactions in 2024 compared to 2022, the agency emphasizes the resilience of cash buyers amid rising mortgage costs. However, the late-stage market cycle is anticipated to impact London and the south-east more significantly, with a subsequent recovery expected from 2028.
Despite the challenges, prime property in central London is projected to avoid price falls in 2024, particularly in the top 5% to 10% segment, driven by international and affluent UK buyers. Political uncertainty in an election year and higher taxes may weigh on values, but the average luxury London property could see a gain of £800,000 over the next five years, reaching £4.7 million.
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