Where will house prices rise the most?


for sale signs

House prices are going to stay in the doldrums for a couple of years, and will struggle to keep up with inflation for a good while to come, according to forecasts from estate agent Savills.

However, some areas and properties will buck the trend. So how will you fare?


The study showed that prices had fallen an average of 2% over the last 12 months, and that this year was unlikely to return more than 0.5%. This clearly isn't keeping pace with inflation - so constitutes a drop in real terms.

Unfortunately this trend is set to continue, with growth totalling 11.5% over the next five years - equating to falls of around 3% after adjustment for inflation. Lucian Cook, director, Savills residential research says: "This year we have seen average values fall in real terms. We now expect the market to show slight nominal growth next year, but remain negative in inflation-adjusted terms until 2016."


However, the picture will differ across the UK. There's worse news in the North East and Yorkshire and Humberside, which will continue to see prices fall for the next couple of years - even before inflation is taken into account.

The positive news is reserved for London and the South East. Prices there have struggled recently, but are expected to outperform in future. Greater London will be particularly strong - where prices are expected to rise 21% by the end of 2017.

The South East, meanwhile will see prices rise 19.5% in that time, while the East of England will see property values increase 17%, the South West will rise 15.5% and the East Midlands 13%.

The worst area will be the North East which will only see prices rise 4.5% by the end of 2017. This is followed by Yorkshire and Humberside which will increase 5.5%, Scotland and the North West which will rise 6% and the West Midlands which will increase 7.5%.


The differences don't just depend on regions, but on the types of property too. Savills claims that problems getting mortgages will mean that price rises and movement will be focused at the top end of the market among wealthier and older people, who have more equity in their property, and are therefore more likely to have access to borrowing.

It says that as a result properties worth less than £250,000 will struggle to sell, as people under the age of 35 cannot afford to buy. Meanwhile it says that sales of homes worth £1 million or more will rise by around 75%.

Prime central London is expected to outperform all other market sectors over the mid term, with price growth totalling 26% by the end of 2017. Yolande Barnes, director, Savills world research, says: "It became clear last year that the UK's residential property market had polarised between prime London and the rest, and this distinction has become increasingly entrenched."

It seems, therefore, that Savills has great news for London-based millionaires, who will continue to sell at high prices to foreign nationals. Meanwhile first and second-time buyers around the country can look forward to a sluggish and difficult five years - which for most will be spent in rented accommodation.

Download this free booklet: Report: Will house prices crash in 2013?

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