Broker Savills said that there will be an 11 per cent drop in house prices between now and 2016, returning the market to a level far closer to the financial landscape in 2001-2. It said that repossessions will likely be kept to a minimum thanks to continuing low interest rates, which will also help prevent an all-out crash in property prices. However, prices will continue to be driven down by ongoing low economic growth and a lower availability of mortgages although the biggest downward pressure will come from the increased cost of living. The peak time for house prices was in 2007, with the average property coming in at £184,000. Today, that figure has fallen to £161,000. By 2016 Savills believes that the average house price will stand at £171,000, which despite being a 6 per cent increase since 2011, represents an 11 per cent drop in real terms, once inflation is factored in. There will of course be regional differences in the fluctuation of property prices, with the price of the prime properties in the London area likely to match the increases expected in the private rented sector due to the lesser availability of mortgages. This will further underline the north-south divide in property prices highlighted only last month by the Rightmove website, which noted that the average price of a house in southern England is now over twice the price of its northern counterpart. Based on its previous data, the broker added that it predicts that by 2016 there will be 7 million fewer house moves and mortgage deals than was previously expected to be the case.
Slow and Steady House Price Drop Set for Five Years
Published on 3 April 2020
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