Increasingly, investors are setting their sights on residential properties away from the usual safe haven of London and the surrounding region. Driven by the prospect of radical house price increases within the next five years, more investors than ever before are picking up properties in select areas of Yorkshire and the north-west.
According to Savills, average house prices in this part of the country could increase by as much as 30% within the next few years. If so, this would outpace London’s house price growth rate by as much as 200%, playing right into the pockets of those who purchase properties at the right time.
2021 was expected by most to bring little other than turbulence and uncertainty to the real estate sector, which has faced one of its most difficult years on record since the beginning of the COVID-19 crisis.
The head of residential research at Savills estate agents, Lucian Cook, admitted that the initial outlook for 2021 looked to be “complex and uneven” at best. Nevertheless, the agency has been forced to revisit its projections due to the sector’s reassuring performance during the first months of the year.
“But the outlook has improved since the beginning of the year given the speed of the vaccination programme, the expected relaxation of social distancing measures, and government support for both jobs and the housing market,” he said.
Five-year predictions
In stark contrast to initial projections of a steady slowdown, Savills now expects property prices in the UK to increase on average by 4% by the end of the year. Forecasting further ahead, average growth of approximately 21% is expected within the next five years.
If this proves accurate, the average asking price for a UK home would be just slightly under £280,000.
But what could prove particularly interesting is the disparity in property price increases between certain regions of the country. According to Savills, some regions in the north-west of England could see average property price increases of 28.8% within the same time. In Yorkshire and Humberside, homes could increase in value on average by as much as 28.2%.
Meanwhile, the five-year growth forecast for London indicates potential property price increases of just 12.6%. This would therefore mean that properties in Yorkshire and the north-west could see property price growth at more than twice the speed of comparable homes in London.
More movers and buyers than ever before are setting their sights on more spacious homes in quieter regions away from major cities, having reconsidered their priorities during three consecutive lockdowns.
In addition, Savills has credited much of the shift in buyer interest to rock-bottom mortgage rates, which could be around for some time to come.
“The expectation that interest rates will stay lower for much longer than was predicted pre-pandemic means there remains capacity for medium-term house price growth despite the unexpectedly strong performance of last year. Across the country as a whole, five-year price growth of around 20% looks sustainable without unduly depleting mortgage affordability,” Cook added.