There are two types of forecasts, one is more from the ‘economists’ and the other is from property experts in the field.
I’ve given a summary below of what they predicted would happen in 2015 a year ago and what they are predicting will happen next year and beyond.
UK forecasts from Savills for 2015 suggest overall price growth will be held back, with just a 2% increase in prices, picking up in 2016 and 2017 to 5%, dropping back to 3% growth in 2018 and 2019. Over the next five years this means house prices are likely to increase by 19%.
Many headlines are likely to make out this is a huge increase overtime, but the reality is, unlike in the past, it means property price growth may well be restrained. In the past (according to Nationwide) property prices normally grow around 3% more than inflation. Taking the long term average of inflation of 3%, this would need to see prices grow at a minimum of 6% a year, whereas in fact the price increase forecasts strongly suggest that prices are just likely to rise (on average) in line with inflation.
This means for those who own a property outright, the true (or real) property value of their home will not increase at all over the next 5 years. So for those looking to their home to help fund their retirement, this might not be quite the news they were hoping for.
The changes shown by Savills forecasts for 2015 now versus this time last year show how much the market has changed in just the last 12 months. And the increases for 2015 Savills are predicting aren’t far off that of Knight Frank, albeit theirs are a little more optimistic.
For the full Savills Quarterly Report forecasting property prices and rents, visit their Residential Research portal.
For the Knight Frank Property price and rental reports, visit their research centre.
Other forecasts from the economic chaps suggest:-
CEBR – predicting falls for 2015
According to these pretty expert forecasters, they aren’t as optimistic as the property community and are
“UK house prices to grow by 7.8% this year but fall by 0.8% in 2015”
And they believe “The decline in prices will be led by London. Prices in the capital are expected to fall by 2.6% in 2015 as domestic and overseas demand fall back.”
“After growing by 7.8% this year, average house prices across the UK will dip by 0.8% in 2015.” According to the CEBR. They believe “The reversal of fortunes in the property market will be even more dramatic in London, where the 17.1% growth seen this year will be followed by a 2.6% contraction for next year as a whole. The London housing market will be at its weakest in Q3 2015, when prices will stand 8.5% lower than in Q3 2014.”
Usually the most pessimistic about the housing market, they are being generally the most optimistic for 2015:-
“The moderation in demand will lead to a further easing in house price inflation, and although the strong economic backdrop will help prices to make further gains, we now think house price growth will be slightly lower at 4% in 2015 and 2016.”
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