U.K. Home Prices Could Rise by Nearly 15% in the Next Five Years
U.K. home prices could grow nearly 15% by 2026, according to a report Friday from the estate agency Chestertons.
After registering an 8% increase in 2021, prices are expected to grow another 4% next year, the figures show. Smaller bumps in prices, between 2% and 3%, are expected in the following years, totaling a rise of 14.8% over the next five years.
“There are a number of factors that should continue to push property prices up in 2022,” Guy Gittins, CEO of Chestertons, wrote in the report. “The economy is recovering better than expected, employment and wages are booming and…most importantly, the number of people looking to move heavily outweighs the number of properties available on the market.”
However, rising costs, including interest rates, could limit home-price growth.
“Price increases are likely to be tempered by the rising cost of living and the expected increases in taxes and interest rates,” he continued. “The re-introduction of Covid-related restrictions also remains a possibility.”
Across London, which has been recovering from both long-lasting uncertainty over Brexit and then the Covid-19 pandemic, prices are forecast to rise 8.2% by 2026, according to the report. The capital saw a 2% uptick in prices this year, which are expected to stay flat in 2022. Growth should begin again in 2023, with increases between 1% and 3% over the next five years.
“London property prices grew much less than the rest of the U.K. in 2021 and prices in some of London’s higher-value locations are still lower than their pre-lockdown level,” Mr. Gittins wrote. “This, combined with a general shortage of housing and the fact that more people are returning to work in London, will push property prices in London’s higher value locations up by 5% in 2022, assuming no further prolonged travel restrictions.”
Significantly higher gains are predicted for prime central London, which registered a 3.5% uptick in prices this year. Chestertons expects a jump of 7% next year, followed by rises of 2% to 4% in the next five years, meaning prices could be up to 20.4% higher by 2026.
“Prime central London prices will see even stronger growth of 7% next year as international buyers return in greater numbers, tempered somewhat by the additional 2% stamp duty surcharge that non-U.K. residents are now charged,” Mr. Gittins said.