Age of growing home ownership is over, says Savills

Savills is forecasting that the rate of house prices rises will be steeper in the south-east than in London over the next five years, as buyers priced out of the capital turn to commuter territory.

Savills also predicts that the number of people living in private rented accommodation will swell by more than a million by 2018.

The firm says that house prices in towns such as Bournemouth, Brighton and Windsor will soar by 32% in the next five years. Surging prices will also be seen in affluent parts of the south-west and midlands, including Bristol, Bath and Solihull.

In contrast, house prices will recover slowly in the north of England, while prices in London will rise at 24.4%, just behind the national average of 25%.

This compares to 9% growth in UK house prices from 2008-13, although Savills says that adjusting for inflation, house prices remain below their pre-crash peak and will barely have recovered in real terms by 2018.

Lucian Cook, head of UK residential research at Savills, said: “As confidence improves, buyers are likely to look to markets beyond London that offer better relative value, though it will be later in the cycle before the north feels this benefit.”

He added: “It is not just about a north-south divide. The gap between London and the south-east is incredibly high at the moment.”

Savills also predicts that Help to Buy will increase transactions by 12% over the scheme’s three-year shelf-life, doing more for home movers than for first-time buyers.

Cook said: “Help to Buy will allow some trapped renters to access home ownership even though the costs of home ownership will exceed those of renting.”

By 2018, Savills predicts that 5.8m households will be in rented accommodation, a million more than today, while the number of home owners will continue to decline.

“The age of growing home ownership is well and truly over,” said Cook.