UK luxury price growth on track to beat initial forecast
The UK high-end housing market is now set to experience a much more prosperous year 2021 than experts initially expected, according to a Savills report on Tuesday.
Driven by four consecutive quarters of strong price growth, new priorities among buyers, the impact of the extended stamp duty holiday and readily available finance, values in the country’s leading real estate sector outside London are expected. now increase by 9% this year, against the 5% initially estimated by the real estate agency.
“Some sellers operating in the main market have been relatively reluctant to put their properties on the market over the past year, partly due to concerns about the risks of Covid-19, but also due to the lack of available properties. for them. to buy. With fewer properties available to meet demand, prices have increased faster than expected, ”said Frances Clacy, research analyst at Savills, in the report.
In particular, high-priced country homes and luxury homes in coastal markets have seen demand increase in response to the experience of Covid-19 lockdowns which has prompted buyers to seek more space and greenery. , but supply limitations in both sectors resulted in annual price growth of 12.9% and 14.6% respectively.
“We expect values to continue to rise for the remainder of 2021, but we expect price growth to slow,” Ms. Clacy said. “From next year, the key factors that will impact prime markets are the gradual rise in interest rates and the prospect of higher taxes. Both can reduce the purchasing power of buyers, which will limit price growth in the medium to long term.
In central London, the recovery will be slower.
Although house prices in the city have risen over the past year for the first time since late 2014 – albeit by just 0.5% – the capital market is still lacking in its wealthy foreign buyers and its office workers.
As such, no significant price increase is expected in central London until 2022, when an 8% increase is considered, according to Savills, who lowered expectations of the 2021 price hike to the capital from 4% to 3%.
But “while price growth has remained modest this year, there is still huge pent-up demand from those who have been constrained by travel over the past year. This suggests that there will likely be a rebalancing in demand once office workers return to their desks and international buyers can visit the capital again more easily, ”Ms. Clacy said.
“It remains to be seen when, and not if, the recovery takes place,” she said.
Over the next five years, prices in central London are expected to rise 21.5%, just behind the rest of the UK at 25.1%.