Changing Structure of UK Property Market - 09/11/2010

Savills, the top draw global estate agency, has published its annual house price forecasts, reporting that its research appears to support the view that grade A prime properties will enjoy a price rise of 33% as opposed to the rest that will only achieve a modest 12% rise over the following five years. If this forecast is correct it means that there may not be a return to the good times of 2007 until 2016.

Savills asserted over a year ago that the property market would suffer a "second slip". However they contend that there will not be a deep "double dip" and the best properties may not even be touched. The report also indicates that not only is there a widening divide between the best stock and the rest but also that a geographic divide between London and the South East and the North of England is opening up.

Lucian Cook, the director of Savills research, points out that the London market operates on entirely different criterion from the rest of the UK. Factors such as being a global financial centre and the draw that the prestigious central and west London properties have on wealthy international investors drive the London market.

If the conclusions in the Savills report prove to be accurate and the levels seen in 2007 do actually return, it will be to a wholly different market with wholly different purchasers. The days of easy lending and cheap credit will be long gone. First time buyers and aspirant second movers with little or no cash deposits and scant chances of obtaining a large enough mortgage to bridge the gap are driving the change in the shape of the housing market. The lower levels of owner occupation, the rising levels of renting and shared ownership will demand a new raft of equity-rich investors to meet the demand. The situation may afford an opportunity to foreign investors keen to take advantage of the structural change in the UK housing market.

[Back to news]