London house prices will flatline next year but South East and East will see strong growth as buyers hunt for value
- House prices will not grow at all next year in London, Savills predicts
- In next five years, property values in the South East will rise 26.4%
- It estimates only 16% of under 35s will be homeowners by 2019
By Lee Boyce for www.Thisismoney.co.uk
Soaring property prices in London will be a thing of the past from next year with values set to flatline until 2019, according to forecasts.
Prices in the capital will grow at half the rate of those across the country generally for the next five years as buyers flock to the South East and East in order to find better value, estate agents Savills believes.
It forecasts house prices to increase by 19.3 per cent until the end of 2019 to reach £225,250 on average, which is around £36,500 more than the current typical property value.
House price slowdown: Savills predicts that property values in London will flatline next year
But it says values in the capital will only see 10.4 per cent growth across the five year period, with prices in the capital already having already jumped by around 15 per cent this year alone.
If this prediction came to fruition, the average London house price would increase £41,700 to £442,783 by the end of 2019.
Next year, Savills estimates no growth in London, with only small rises from 2016 onwards.
By contrast, the South East will see prices jump by 26.4 per cent over the coming five years, taking the average property value to £296,244 as people choose to sell-up in the capital and move outwards.
Values in the East will lift by a similar 25.2 per cent to reach £243,739 on average by the end of 2019, the report predicts.
Regional breakdown: The South East and East will far the best in the coming years according to Savills
Lucian Cook, head of Savills research, said: 'Constraints on price growth are most likely to be felt in London, given where pricing sits after a prolonged bull run.
'There is already evidence of a change in sentiment among buyers who are increasingly aware that the housing market in the capital looks fully priced.'
Elsewhere, property prices are expected to lift by 17.6 per cent in Scotland to reach £167,331, while those in Wales are predicted to rise by 15.3 per cent to reach £166,142 by the end of 2019.
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 per cent increase taking average values there to £137,360.
Those in the North West were predicted to push up by 13.7 per cent to reach £166,866 by the end of 2019.
Price breakdown: How much each age group spends on housing costs
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 1.2million over the next five years.
It predicts that by the end of 2019, only 16 per cent of people aged under 35 will be homeowners, compared with 28 per cent now.
The struggle to get on the housing ladder will be particularly noticeable 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, believes 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'.
The research was made using house price figures from Nationwide Building Society as a base.