The latest property report published by Savills indicates that prime residential London property will increase nearly 23% in the next 5 years.
The report forecasts growth this year of 3%, remaining flat in 2013, rising by 5% in 2014 and 6.5% in both 2015 and 2016. This is a staggering 22.7% over the next 5 years. The report is in contrast to other commemntors who remain less bullish on property inflation here in the capital. Fatham a property consultancy, has recently indicated that the recent fuelling of overseas buyers purchasing prime property has artificially increased prices from overseas investors looking for a safe haven outside the eurozone crisis. It predicts that a break up of the eurozone could result in a fall in UK prices of 50% over the same 5 year period, given that sterling would strengthen and make UK prices far less attractive. This would have a knock on effect on the need for large mortgages for both foreign and UK home buyers.
Savills take a less optimistic view regarding prices in the wider UK housing market. It forecasts a fall in prices by 2% this year, a rise of 0.5% next year and future growth by 1% rising to 6% in 2016. It predicts areas such as the Humber and Yorkshire to see the greatest falls with 2.6% reduction in property prices over the 5 year period. This is coupled by falls of 3.1% in the North East. However, it expects the general South to fair far better with inflationary pressures remaining in the South East and South West increasing 15% and 10.3% resepctively.