Prime regional housing market set to outpace London
Average values across the prime regional housing market are forecast to rise by 11.9% by the end of 2031, according to Savills.
This exceeds the anticipated growth of 9.7% in outer prime London and 8.7% in Prime Central London over the same time period.
However, Savills outlined that recovery across the UK housing market is not expected until 2028, with a depression in prices across all prime regional markets of 2% in 2027.
However, Frances McDonald, director of residential research at Savills, said: “The prime markets are down, not out, and a medium- or long-term view is more relevant for prospective buyers. Needs-based and equity-driven demand will continue to underpin activity, while lower mortgage rates and an improving economic backdrop should gradually release pent-up demand from 2028 onwards.”
Stock shortages push prices higher
McDonald added: “While performance will remain highly dependent on location, we’re starting to see stock shortages emerge in parts of the prime regional market, particularly at very top end.”
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Across the prime regional markets, Scotland is forecast to be the strongest performing market, with cumulative growth of 17% over five years and no decline expected in 2027.
The Midlands and North are also expected to outperform, with values projected to rise 14.7% over the five-year period, compared to the 11.9% average across all prime regional markets.
By contrast, suburban markets are expected to lag, posting the weakest five-year growth at 7.5%, after the sharpest fall in 2027 of 3.5%.
McDonald said demand was likely to be focused on the best properties, but “buyers remain discerning, so vendors still need to take a pragmatic approach to pricing if they want to achieve a successful sale.”
Needs-based moves support outer prime London
Savills said higher mortgage rates are likely to keep buyer sentiment subdued.
Furthermore, a shortage of stock for family houses in particular will mitigate the risk of substantial price falls. Values are forecast to decline by 2.5% in 2027, before returning to growth of 2% in 2028.
McDonald added: “Uncertainty surrounding the High Value Council Tax Surcharge has increased price sensitivity at the top end of the market, particularly in boroughs proposing further council tax rises.”
Overall, however, McDonald remarked that “needs-based moves, particularly among families, will continue to underpin demand.”
