Savills has upgraded its UK house price forecasts following an unexpectedly strong market in 2020, with Yorkshire expected to exceed the predicted five-year growth average. The new forecasts follow an extraordinary year, which saw UK prices rise by an average 7.3 per cent – the first time in modern history that house values have risen in a recession, as people’s desire to move home outweighed the uncertainty surrounding jobs and finances.
Savills updated five-year forecast predicts a 28.2 per cent increase in average house prices in Yorkshire between 2021-2025.
This is 7.1 per cent higher than the predicted UK average of 21.1 per cent and more than double the average expected in London, which is 12.6 per cent.
Savills predicts that Yorkshire house prices will rise by 4.5pc in 2021, 6pc in 2022, 5.5pc in 2023, 5pc in 2024 and 4.5pc in 2025. This will take the average house price in the region from £172,326 in 2020 to £220,921 by the end of 2025. Prices in the neighbouring North West are forecast to rise by 28.8 per cent between 2021 and 2025, taking the average house price there to £227,879 and values in the North East are predicted to increase by 20.5pc bringing the average house price to £165, 725.
Ed Stoyle, head of residential sales at Savills in Yorkshire, says: “While the demand for more space has meant regional house price growth has been relatively even across most of the UK, from 2022 we expect to see a return to the pattern of growth that would normally be expected at this stage in the housing market cycle.
Buyer commitment to moving remains strong and the sea change of wanting more space, both indoors and out, coupled with home working, is fuelling the move to the country trend, which shows no sign of slowing. In particular, this points to a continuation of the country house revival and a demand for lifestyle relocation and second homes that will favour many locations across Yorkshire.”
Savills says price sensitivity will be a factor this year, but adds that the value gap between towns and cities and neighbouring village and rural markets, will continue to support prices in the latter.
Lucian Cook, Savills head of residential research, said: “2021 is going to be a complex and uneven year, with competing forces impacting the housing market at different points.
“But the outlook has improved since the beginning of the year, given the speed of the vaccination programme, the expected relaxation of social distancing measures, and government support for both jobs and the housing market. Real-time data from TwentyCi tells us that new sales agreed remain well above the pre-pandemic norm, with the same true of mortgage approvals.
“That points to a strong first half which, together with the introduction of the mortgage guarantee scheme, underpins our expectation of 1.4m transactions in 2021. By extending both the stamp duty holiday and the furlough scheme in the Budget, the Chancellor has significantly reduced the downside risks in the mid-year, while a recovering economy should support price growth towards the year end.”
Savills adds that the expectation that interest rates will stay lower for much longer than was predicted pre-pandemic, means there remains capacity for medium-term house price growth despite the unexpectedly strong performance of last year.