In addition to sharp increases, research suggests that the north-south divide in property prices will also shrink over the next five years
Property group Savills predicts that average house prices across Britain are set to exceed £370,000, with some properties rising by more than £40,000, in the next five years.
In addition to sharp increases, research suggests that the north-south divide in property prices will also shrink over the next five years, with high prices in the south being subject to affordability initiatives, to ensure that people aren’t priced out of certain areas. London is however still expected to come top, as the area with the highest average house prices in 2026.
Lucian Cook, head of residential research at Savills, commented on the predictions: With the prospect of inflationary pressures persisting into next year, bringing forward the first anticipated interest-rate rise, we expect price growth in the near term to be somewhat more muted than we have seen of late.
He also said that with gradual interest-rate rises expected, Savills expect the mortgage regulation introduced back in 2014 to show its hand more clearly over the next five years and that stress testing of affordability has meant that existing borrowers are unlikely to get into financial trouble as rates creep up.
But, said Cook, it will cap how much new buyers can borrow relative to their income in a higher interest-rate environment, acting as a drag on both prospective price growth and market activity over our forecast period.
Lawrence Bowles, director of residential research at Savills, commented on the closing of regional differences indicated by the predictions: Given where we are in the housing market cycle, the north-south divide in house prices looks set to close further over the next five years. There remains more of an affordability cushion beyond London and the south. The Government’s levelling up agenda has the potential to accelerate a rebalancing of the market, but only if it gains meaningful traction.
