Residential Market Forecast and What it Means for Our Clients
4 December 2018
So, Knight Frank have dusted off the crystal ball and produced their market forecast for the next five years. We thought it might be useful for us to summarise their projections for the South East and interpret the statistics for clients. They have assumed that a Brexit deal will be agreed with a transition period to the end of 2020.
- Affordability is a key factor in the housing market and average house prices in the South East are 37% higher than at the previous peak in the market in late 2007.
However, if you are looking to move to Kent or East Sussex from London then the good news is that prices are currently 60% higher in London than in 2007. London has been experiencing price correction but with such historic gains moving to the country not only makes financial sense but, in our opinion, is also profoundly lifestyle-enhancing.
- Mainstream house price growth in the South East is predicted to be broadly neutral over the next two years, followed by 2.5% in 2021, 1.5% in 2022 and 5% in 2023. So purchasers can look forward to 9.2% rise in the value of a home over the five year period to 2023. Knight Frank reports that it’s a similar story for the prime country property market in the UK as a whole which is predicted to see growth of 8.2% over the next five years.
Our clients nearly always stay in their new home for over five years so in the longer term clients can look forward to a good return on their investment especially as we will find you the best-in-class property for your budget and make sure it’s future-proofed.
- Transactions have slowed due to 3 factors. A longer term move towards home owners staying in one property for longer, especially in more expensive markets, as the tax burden has increased over the last two decades. Mortgage regulation has medium term downward pressure on transaction levels but record-low mortgage rates continue to underpin the market. In the short term, uncertainly due to leaving the European Union is causing a reluctance to move ahead of Brexit.
The reality on the ground is that stock levels are low and having a professional search agent with a proven track record and the right connections can make all the difference. A high volume of deals are being done off-market and we have the contacts to unearth those hidden gems that you won’t see on the internet and get you through the front door first.
- Knight Frank has produced a really informative risk monitor to assess the likelihood of these scenarios happening and their impact: Brexit/Political Upheaval, General Election, Geo-Political factors, Interest Rates, UK Economy and Property Tax Changes. To summarise, in looking at the UK as a whole, the scenarios that pose the most risk to Knight Frank’s central forecast are Brexit and the general election planned for 2022.
We do everything in our power to mitigate risk. That means finding the best-in-class property that not only is right for you, makes your heart sing and is as immune as possible to the vagaries of the property market. That means no big compromises and no blights, however small. We can’t predict what the post-Brexit property world looks like locally or the results of the next general election but we can ensure that you make a sound investment that will give you joy for many years to come.