London house prices 'to flatline'
Many buyers will look for value outside of capital
By Press Association
London house price rises 'slowed'
Yui Mok/PA WIRE
London house prices are set to flatline in 2015 and will grow at half the rate of those across the country generally for the next five years, according to forecasts.
The South East and the East of England will show the strongest property price growth between now and 2019 as buyers look for value outside the English capital, a report from Savills said.
But as prices continue to head upwards, Savills also predicts that the number of households which are privately renting in England and Wales will surge by 1.2 million over the next five years as the struggle for younger generations to get on the housing ladder continues.
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Savills forecasts that UK house prices will increase by around 19.3% by the end of 2019 to reach £225,250 on average, which is around £36,500 more than the current typical property value.
But values in London will only see 10.4% growth across the five year period, with prices in the capital already having already jumped by around 15% this year alone, it predicts.
0% growth in 2015
This prediction would mean the average London house price increased to £442,783 by the end of 2019, which is around £41,700 more than it is now.
Savills has pencilled in 0% growth for property prices in London across 2015.
Prices should then start to lift there again from 2016 onwards, it said.
By contrast, the South East will see prices jump by 26.4% over the coming five years, taking the average property value to £296,244, according to the forecast.
Values in the East will lift by 25.2% to reach £243,739 on average by the end of 2019, the report predicts.
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Property values are expected to lift by 17.6% in Scotland to reach £167,331, while those in Wales are predicted to rise by 15.3% to reach £166,142 by the end of 2019.
Savills said the London market would take a pause next year as it now looked "relatively fully valued" and surging prices had already prompted a change in buyer sentiment.
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It said prices would increase at a faster pace in the surrounding southern regions "as buyers priced out of London seek relative value beyond the capital".
Prices in the North East were expected to grow more strongly in percentage terms than those in London over the coming five years, with an expected 12.6% increase taking average values there to £137,360.
Those in the North West were predicted to push up by 13.7% to reach £166,866 by the end of 2019.
The research was made using house price figures from Nationwide Building Society as a base.
'Only one in six under 35s will own a home'
Savills also predicts that tougher mortgage regulation and an "acute housing shortage" will mean the number of private rented households in England and Wales swells by 1.2 million over the next five years.
It predicts that by the end of 2019, only 16% of people aged under 35 will be homeowners, compared with 28% now.
The struggle to get on the housing ladder will be particularly acute in London, where the strong growth in property prices which has already happened has pushed home ownership beyond the reach of many people, the report said.
Neil Hudson, senior residential research analyst at Savills, said the predicted increase in renters presented "huge challenges" to governments and other bodies.
He said the trend "needs a multi-faceted, long-term and deep-pocketed response".