Cash buyer transactions to rise 3% over the next 5 years due to the untapped potential of the retirement housing sector
House price growth in the North West will be almost five times greater than the rate in London and nearly 50% higher than the UK average over the next five years, according to the annual residential property forecast by Savills.
The estate agency predicts that prices across the UK will be muted in 2019, with the strongest rates of growth expected in the North West and the Midlands (3.0%) compared to no change in the South East and East of England and a 2.0% decline in London.
From 2020 onwards, the rate of growth is expected to accelerate, doubling in several regions including the North West (6.0%), Yorkshire & the Humber (5.5%) and the North East (5.0%).
Over the next five years, Savills predicts compound house price growth will be 21.6% in the North West, 20.5% in Yorkshire & the Humber, 19.3% in both the East and West Midlands, and 17.6% in the North East; higher than the UK average of 14.8%.
In the South West, prices will rise by 12.6%, whilst in the South East and East of England growth will be more muted at 9.3%. In London, prices will rise by just 4.5% over the next 5 years.
As well as higher growth outside the South, the agency predicts first-time buyer expansion will be limited by the ratio of loan-to-incomes, and that fewer existing homeowners will trade up to a new property.
Additionally, Savills expects mortgaged transactions will decline between now and 2023 for first-time and buy-to-let purchasers, falling by 3% and 23% respectively, while the figure will remain static for home movers.
However, cash buyer transactions are expected to rise by 3% over the next 5 years, with their longer-term purchases influenced by the development and currently untapped opportunities of the retirement housing sector.
This is because, similar to predictions by real estate firm JLL, Savills forecasts the base interest rate is expected to rise every year, peaking at 2.80% in 2023, further pressuring household finances and the amount they can borrow.