Friday, Nov 05, 2010

Savills return to peak prediction is extended by 2 years

Bloomberg: U.K. Home Prices Won't Return to Peak Until 2016, Savills Says

U.K. home prices may take longer than expected to return to peak levels as tax increases and job cuts cause values to drop through next year, Savills Plc said. It will probably take until 2016 for prices to get back to where they were in 2007, according to a report released today. That’s two years later than the London-based broker predicted in November 2009. Savills expects average U.K. values to fall 3 percent next year and start to gain in 2012.

Posted by jack c @ 09:36 AM (1665 views) Add Comment

7 Comments

1. ontheotherhand said...

"That’s two years later than the London-based broker predicted in November 2009", and they know as much about 2016 now as they did about 2014 then. Ridiculous. If they really wanted to tell us something about the value of homes in the future, they would tell us their prediction of inflation at the same time.

Friday, November 5, 2010 09:53AM Report Comment
 

2. righttoleech said...

Oh Savills, wondrous sages of the VI sect, pray tell us the exact date in 2016 that prices will recover?

Friday, November 5, 2010 09:59AM Report Comment
 

3. jack c said...

Savills forecasts split in housing market

A 'lost generation' of first-time buyers will force down prices of starter homes, but push up rental growth for residential landlords, according to property consultancy Savills. The prediction, made in its annual house price forecast this week, reflects "structural change" within the UK's housing market.

Head of residential research Yolanda Barnes believes the UK "is getting like Germany", where first-time buyers wait until their 40s before purchasing their "ultimate home", a property they will live in for a generation or more. Savills believes the trend will push up the price of "Grade A" properties (the most desirable family homes) and forecasts these will outperform the wider market by 5 per cent over the next five years. It will also increase rental demand for studios and smaller flats (which it terms "Grade C"). "Put simply, what will those older buyers do for the first 20 years of their property life?" Ms Barnes asks. "Increased rental demand will place big upward pressure on rental levels."

However, there will be no corresponding rise in house prices for these types of properties, which are forecast to underperform the wider market by 5 per cent, regardless of their geographic location. With first-time buyers unable to amass deposits, investors will be the only buyers, and Savills says prices will languish "until a combination of relatively low prices and rising rents boosts yields to a level that investors find irresistible".

Overall, Savills predicts a "second slip, rather than double dip" for UK house prices, with the mainstream market falling by 3 per cent in 2011, before returning to modest growth 2012. The five-year UK forecast is a rise of 12 per cent.

However, prime properties in central London are forecast to rocket 33 per cent in the same five-year period, with a rise of 30 per cent for prime stock in the south east region. "London will continue to lead the recovery, financed by overseas wealth inflows and a strong private sector economy," says Savills research director Lucian Cook. The weakest growth is forecast for the north east, where prices are only expected to rise 0.7 per cent in the next five years.

SOURCE - www.investorschronicle.co.uk/Companies/ByEvent/Indicators/Analysis/article/20101105/743250a4-e6a1-11df-90ac-00144f2af8e8/Savills-forecasts-split-in-housing-market.jsp

Friday, November 5, 2010 10:11AM Report Comment
 

4. flashman said...

It's a sleight of hand. Six years of compound inflation (2010-2016) will disguise the fact that a 'return to peak', is in fact a large drop

Friday, November 5, 2010 10:14AM Report Comment
 

5. 51ck-6-51x said...

RE: UK getting like Germany
- In Germany it's a socially chosen path; in the UK a financial one:
If houses in the UK which were typical of first time buyers and renter's dropped 50% overnight and BTLers could not acquire finance (or equally well could not get the preferential taxation position they currently do) there would be a plethora of new entrants.

Friday, November 5, 2010 10:55AM Report Comment
 

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7. Blackers said...

What a joke. I live in mid-sussex and the local Savills branch is advertising houses at about 15% above 2007.I should read them back there own press. I'd be very happy if we were at 2007 prices around here., All the agents have gone bonkers!

Saturday, November 6, 2010 08:57AM Report Comment
 

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