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Insight & Opinion

Savills: What’s next for UK property?

Author: Gemma





For the past couple of years, the housing market in the UK has been strong as prices have started to recover impressively, presenting a number of new opportunities for investors.

According to Savills, moving forward, the market will continue to grow, with house prices performing well. However, there will be constraints in the next few months, and it will be the way in which the market responds that will prove its worth.


This year is set to be a strong one for the UK property market again, according to Savills, but constraints in place will cap price growth moving forward, the report added.

In the year to the end of 2014, house prices look set to climb by an average of 8.5 per cent across the UK, higher than the 8.4 per cent that was recorded at the end of 2013. 2014 has also seen year-on-year growth peak, when it hit a record high of 11.5 per cent in the second quarter of the year.

However, there may be constraints placed on the market in the future that see the sector going through a period where growth is somewhat slower than what has been in evidence in the past two years. Savills predicts that house prices will rise at a rate of two per cent in 2015 and five per cent in each of the two years after.

The reasons for this more subdued rate of growth will be the fact that two factors balance each other out. On one hand, economic health and the sentiment among buyers will only grow as the country continues to get stronger. However, with interest rates looking likely to rise in the first half of 2015, mortgage lending may well be subdued.

Generation rent

One change that has been brought about by rising house prices in recent years that may well play into the hands of investors is the increasing number of young people now looking to rent rather than buy their own home. What used to be seen as something of a major life milestone has now become an archaic tradition in the eyes of those who are happy to rent.

Savills said that in the decade to the end of 2011, the number of people aged between 35 and 49 who lived in privately rented accommodation almost doubled. Meanwhile, 46 per cent of all people aged between 18 and 35 rented their homes in 2011, the report shows.

The continued increase in house prices, as well as a growing desire to rent rather than own, will only serve to increase this number. Savills’ report states that over the course of the next five years, the number of privately rented homes in the UK will climb by 1.2 million, while there will be 202,000 fewer owned homes than now.

It means that by the end of 2019, 24 per cent of all UK homes will be rented. Among under 35s, this will rise to 66 per cent, presenting a significant opportunity for the buy-to-let sector across the UK.

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