Knight Frank: UK housing forecast
Date : 25 October 2011
Key headlines:
- Prime central London prices will climb 5% next year, before pausing in 2013 and rising by a further 4% in 2014. Cumulatively, prices will rise 24% by the end of 2016.
- Geo-political issues will continue to push overseas buyers into London, especially at the top end of the market, as the capital is seen as a safe haven
- The prime central London market will remain “de-coupled” from the rest of the UK market
- Average house prices across the UK will drop by 5% next year, and will show little convincing growth until 2014
- In real terms, adjusted for CPI inflation, house prices will have fallen 29% from the peak of the market by 2015 and will not regain the levels seen 2007 levels until 2028
- Prime country house prices will slip by 2.8% next year before returning to growth in the mid-term following the establishment of more convincing UK economic growth from 2013 and beyond
Grainne Gilmore, head of UK residential research at Knight Frank, said: “After falling by 15% in 2008, it was widely forecast that the market would dip again the following year, but this failed to happen - largely because of the drop in interest rates. We believe thatthis correction is still to come, but that it has been pushed further and further out because of low base rates. But next year, amid a “perfect storm” of a struggling economy, public sector cuts and rising unemployment, prices will fall. As interest rates start to rise, prices will struggle to maintain any notable growth until 2015.”
Commenting on the Prime London property, Liam Bailey, head of research at Knight Frank, said: ”Prices in prime central London are currently at an all time high, despite which we believe there is scope for further price gains over the next 12 months, averaging 5% across 2012. The reasons which have underpinned recent growth, a weak pound, renewed wealth creation in emerging markets, the search for safe-haven assets and flight capital – all seem set to continue at least in the short term reinforcing our positive view for next year.”
To view the full report please go to:
For further information, please contact:
Liam Bailey, head of residential research, liam.bailey@knightfrank.com, +44 20 7861 5133 or +44 (0) 7919 303 148
Gráinne Gilmore, head of UK residential research, grainne.gilmore@knightfrank.com, +44 (0) 20 7861 5102 or +44 (0) 7785 527 1458
Daisy Ziegler, London residential PR manager, daisy.ziegler@knightfrank.com, +44 (0) 20 7861 1031
Notes to Editors
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank and its New York-based global partner, Newmark Knight Frank, operate from 209 offices, in 47 countries, across six continents. More than 6,840 professionals handle in excess of US$755 billion (£521 billion) worth of commercial, agricultural and residential real estate annually, advising clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit www.knightfrank.com.
No: 11pr247