House Price Forecasts for the next 5 years

House Price Forecasts for the next 5 years

The latest residential forecast from Knight Frank has just been released. The forecast reveals that house price growth across the UK is expected to be 1% in 2018 before reaching 14.2% cumulatively between 2018 and 2022. Rents are also forecast to grow significantly over this period.

Whilst the report is predicting slow price growth in 2018 (largely due to the uncertainty caused by Brexit), Knight Frank expects it to rally considerably once a deal is finally completed. It also expects the market to be quite localised with stronger growth seen in areas such as the North West, the Midlands and the East of England.

Here are some of the key findings from the report:

  • Prices in London are forecast to fall by 0.5% in 2018, but the cumulative growth over the next 5 years is expected to be 13.1%
  • Prices in the North West are forecast to rise by 2% in 2017, dip to 1% in 2018, but then rally to between 4 and 4.5% between 2020 and 2022. Cumulatively this is 13.1% over the 5-year period.
  • Scotland is forecast to see the lowest price growth over the next 5 years with a cumulative 12% increase.
  • Rents across the UK are expected to rise by 2.5% over the next 3 years and then rise further still during 2021 and 2022. Overall, a total rise of 14% is forecast over the next 5 years.

Commenting on the report, Knight Frank said : “The UK may now be entering a period of interest rate rises but, even so, we expect rates to be low compared to long term norms by the end of the forecast period. While development levels are rising across the country, the shortage of new homes is unlikely to be fully reversed in the coming years and that will underpin pricing. On the other hand, factors such as deepening affordability pressures and property taxes, will continue to weigh on pricing.”