UK property prices are expected to increase by 18% in the next five years, according to a recent report by Strutt & Parker.
As of the first quarter of 2018, the overall market grew 2.5% in a year-over-year comparison. The best performing regions were Northern Ireland, Wales and the West Midlands.
“People have come to terms with Brexit, and sellers should be preparing to act on plans put back from last year,” Guy Robinson, Strutt & Parker’s head of residential agency said in the report, which was published last week.
However, in London, where Brexit could take the largest economic toll, things look a little grimmer. Prices fell by 1.1% in a year-over-year comparison for the first quarter, making it the worst performing region in the country.
In prime central London, Strutt & Parker’s best-case scenario projection for 2018 property values is that they will remain flat. The downside is a 5% decrease. From then on, it is unclear how the market will pivot.
“We maintain that from 2019 onwards it is extremely difficult to forecast the housing market with any certainty, but we would expect some bounce back and a return to growth once more stability has returned to U.K. politics and the economy,” Vanessa Hale, Strutt & Parker’s director of research, said in the report.
The best-case scenario over the next five years for prime central London is 23% growth. The worst case, according to the report, is no growth at all.
The luxury real estate sector outside of London, which includes properties worth more than £2 million (US$2.71 million), was strongest in Southeast and Eastern England during the first quarter of this year.
The National Institute for Economic and Social Research expects interest rates to gradually increase, reaching 2.0% by 2021. This will increase the costs of mortgages for some households, at the same time as increasing savings rates for others.