House prices set to surge in the north, while the south falls behind
The North West of England is set to see the strongest house price growth over the next 5 years, according to a report by leading estate agent Savills, with prices projected to rise by 18.1% between 2018 and 2022.
The region is followed by the North East and Yorkshire & Humberside, where prices are expected to increase by 17.6% in both areas – surpassing the UK average of 14.2%.
On the other end of the spectrum, southern regions are likely to see a more modest growth, as affordability continues to be squeezed in these areas.
The East of England and the South East are both projected to see a rise of 11.5%, while London will only see a small increase of 7.1% by 2022.
According to the company, the next five years is expected to follow the typical market cycle, where a more modest growth in London often leads to a surge in momentum for the North West and the North East.
With these areas being more affordable than the capital, they are more likely to attract first time buyers looking to put down a smaller deposit and avoid a large stamp duty bill.
Rents are generally also more affordable in these areas, compared to the south, which increases the possibility of retaining more graduates in the regions and, in turn, the demand for rental properties.
Commenting on the report, Lawrence Bowles, Associate at Savills, said:
‘Affordability in the capital is already more stretched than the rest of the UK, putting a brake on growth. But areas beyond the Home Counties have potential for growth: incomes have grown more in line with house prices, aiding affordability.’
In order to tackle the stretching affordability in the UK, chancellor Philip Hammond is expected to put housing at the top of the agenda for today’s Budget, hinting that he is willing to increase the annual target from 200,000 to 300,000 new homes each year.