House prices in East of England predicted to rise by 5pc
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House prices in the East of England are now expected to rise by 5pc this year, according to new research from property experts Savills.
The new forecasts are an increase on previous predictions and take in to account the measures announced in the recent Budget and 2020’s unexpectedly strong housing market, which saw prices across the UK rise 7.3pc - the first time in modern history that property prices have risen during a recession.
Savills was expecting negligible house price growth in 2021 but has revised its prediction as it appears that a desire to move home is outweighing economic uncertainty.
The property expert is forecasting mainstream house prices in the East of England to increase by 5pc over the next 12 months – with five year growth of 17pc. It means the average house price in the region would increase from £310,240 to £362,981 by 2025.
Growth is lower in the East of England than the rest of the UK, which predicts a five year growth of 21pc, but is in line with figures predicted for across the South East. London, in contrast, is expected to see house prices grow by 12pc in the next five years and, in the North West, by 28.8pc.
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At the higher end – those homes valued at £1m or more – prices are expected to increase by 5.5pc over the next year and by 21.6pc by the end of 2025. With the search for more space continuing to drive the market, it's predicted that locations such as Norfolk and Suffolk will remain particularly popular.
Ben Rivett, joint head residential at Savills in Norwich, said: “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.
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“New sales agreed remain well above the pre-pandemic norm, while the same is true of mortgage approvals. By extending both the stamp duty holiday and the furlough scheme in the recent Budget, the Chancellor has significantly reduced the downside risks in the mid-year, while a recovering economy should support price growth towards the year end.”
Savills is predicting mainstream house prices across the whole of the UK to increase by an average of 4pc this year, with 21.1pc total growth from 2021-2025. At the higher end of the market the increase is expected to be 5pc in 2021 and 20.5pc over the next five years.
Demand for more space has meant house price growth has been relatively even across most of the UK – but from 2022 Savills expects to see a return to the pattern of growth that would normally be expected at this stage in the housing market cycle.
This indicates stronger increases in the markets further from London, where lower house price to household income ratios leave more capacity for growth.
Natalie Howlett-Clarke, joint head of residential at Savills Norwich, added: “The move to the country trend shows no sign of slowing and the search for space – together with longer term adaptations to home working – will likely remain dominant drivers in 2021. This points to a continuation of the country house revival and a demand for lifestyle relocation.
“We anticipate that the East of England – and the likes of Norfolk and Suffolk in particular – will continue to be in strong demand by those seeking a move away from the capital, however we also expect growth to be supported by local upsizers and buyers relocating from other regions.”
Price sensitivity will continue to be a factor this year, Savills says, but the value gap between towns and cities and neighbouring village and rural markets will lead to variations in price growth between different locations.
Residential research analyst Frances Clacy added: “Looking further ahead, the wider tax environment and any longer term implications of Brexit could impact buyer spending power in the prime markets.
"The government will need to begin to recoup some of the costs of its pandemic support packages, something we might see once the economic recovery takes hold. This moderates price growth expectations later this year and through the next two years.”