Sales Dull, Rents Exciting in Savills Forecast

Savills is the third large top-end estate agency to give its end-of-year housing market predictions, concentrating firmly on the small high value sector of the market.

It looks more at a five-year forecast than what is likely to occur only in 2013.

In recent years Savills has issued one or more 'mid-year' revisions to its annual forecasts - an indication, perhaps, that the market is so unpredictable that no one can really say what is happening with any authority, even at the low-transaction top-end.

But if revisions to annual forecasts are necessary, how reliable are five-year predictions?

Savills anticipates:

- no change in Prime Central London values next year "with growth resuming in 2014";

- micro-locations like what it calls "prime south west London" relying increasingly on international money "coming out of PCL" - a tacit admission that even at the top-end, domestic sales are relatively low so foreign buyers provide a lot of business;

- mainstream house prices will rise 11.5 per cent in the next five years although after inflation that represents a real-term drop of three per cent.

The firm's most interesting predictions, perhaps, are about the rental market, although again attention is concentrated most of the top-end and London.

Average rents across the UK will rise 2.5 per cent next year and a total of 18.2 per cent by the end of 2017. The biggest rises will be in Greater London, where rents will grow 26.4 per cent in the next five years.

“In London the number of households in the private rented sector has risen 90 per cent over the past 10 years while the population of 20 to 34 year olds has grown by 18 per cent. At the same time, the average first time buyer deposit has risen from £12,000 to £58,000” says Savills’ research head, Yolande Barnes.

More forecasts are being released next week. Watch this space...

If you would like to to comment on this article, click HERE to e-mail Graham. Follow PropertyJourn on Twitter