Average UK house price growth is likely to reach 17 percent by the end of 2020

The international real estate adviser predicts that average UK house price growth for this sector of the market is likely to reach 17 percent by the end of 2020 with it reaching as much as 21.6 percent in the South East.

“Much depends on the speed at which interest rates rise. Too quickly, house price growth will be curtailed but, if rates remain low for too long, there is a risk prices will rise too far, creating affordability issues later down the line” says Lucian Cook, Head of Savills Residential Research. “That risk has been mitigated by recent mortgage regulation which, by stress testing affordability, caps the amount people can borrow relative to incomes.”

Savills anticipates house price growth to be strongest in the south and east of England which offer value relative to the capital so should benefit as the ripple gains traction. Annual transaction rates, at 1.2 million this year, are expected to rise to 1.3 million by 2020, still far short of the 1.7 million pre-crunch norm, as deposit affordability continues to act as a brake on demand and the changes to taxation of buy to let property restrict the ability of some landlords to expand their portfolios.

Julian David, an Associate Director at Savills in Harpenden, adds: “This research shows the potential value of the markets in and around Harpenden - positive for those already on the housing ladder and potentially valuable for those currently investing in the area or considering investing in the future. We have found over the course of this year that accurately priced properties in the best locations have sold well. However, the potential rises in interest rates and restrictions surrounding lending cannot be under-estimated and the gap between the expectations of vendors and what purchasers are prepared or able to pay, is at its widest for many years, resulting in a market which has been challenging.”