The latest predictions for UK house prices

Posted by Mark Lloyd, Property Mastery Academy on 21 May 2018 | Comments

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As we’re a good way into 2018, let’s take a look at how the housing market is faring so far this year – and review some of the predictions from property experts.

UK property prices rose by 1.5% in March compared to the previous month according to the Halifax House Price Index with the average price of a British house hitting £227,871, the highest on record.

Halifax’s managing director, Russell Galley, said low unemployment, low mortgage rates and the ongoing shortage of properties for sale would underpin price growth in coming months with Halifax predicting annual price growth remaining close to 3%.

Jeremy Leaf, an estate agent in north London and housing spokesman at the Royal Institution of Chartered Surveyors, agreed, saying, “The increase in property prices is more to do with a shortage of stock, low mortgage approvals, and subdued activity rather than any great change in the market.”

uk house price growth

Price Waterhouse Coopers is forecasting average UK house prices will rise by 4% a year until 2025.

Meanwhile, global real estate services provider Savills takes a different view and predicts house prices in the UK will rise by only 1% in 2018. Lucian Cook, Savills Director of Residential Research said, “Uncertainty over what Brexit means for the UK economy and how it will impact on household finances will increasingly act as a drag on house prices.”

Mortgages at affordable levels

Mortgages are at their most affordable level in a decade. In the fourth quarter of 2017, typical payments accounted for 29% of homeowners’ disposable income – that’s compared to 48% of ten years before.

According to Mortgage Monitor from e. surv, there were 66,614 mortgages approved in the UK in March 2018. In this period, smaller deposits accounted for 19.6% of mortgage approvals.

Growth was also seen for those with large deposits. 34.5% of the market in March were those with deposits of 60% or more - the highest ratio seen so far this year. 45.9% of approvals were made to the steady mid-market borrowers.

The north-south divide narrows

Interestingly, the north-south divide in property values continues to narrow as the Capital’s housing market cools and while parts of northern England enjoy a surge.

According to e.surv’s Mortgage Monitor, London remains the toughest area in the UK for first-time buyers and those with smaller deposits – this group accounted for only 13% of mortgage approvals.

Whereas Yorkshire is proving to be the most popular area in the UK for first-time buyers –
30.3% of loans there went to small deposit borrowers.

“If you were a first-time buyer with the ability to live and work anywhere, the Yorkshire market would be the first place to start your house hunting. It’s the only market in the UK which is more dominated by small deposit buyers than those with large deposits of cash,” said Richard Sexton, E.surv director.

Modest rises are expected

Overall, the majority of property experts are anticipating house prices to rise in the UK by a modest amount. And, it’s widely felt, the rate of house price growth will be greater in the UK as a whole than that in London.

One thing’s for certain – there are still plenty of opportunities for property investors across the UK - especially with interest rates remaining low.

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