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Winter 2006

RRB Winter 2006/07

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  • Low growth in 2005 seems to have constituted the full extent of the housing market slowdown. Interest rate rises do no yet seem to have had a significant impact. We now forecast 9% UK residential property market growth for 2006.
  • Growth in prime central London will total 20% for 2006. Prime and southern markets are leading growth, fuelled by overseas equity and City bonuses.
  • There is no housing market bubble - yet. Only a severe external economic shock or very unpleasant inflationary surprise could cause prices to reduce substantially from current levels.
  • Strong demand coupled with competition for very short supply of the right type of property in the right place will fuel further house price rises.We are forecasting growth in the UK residential market of 7% in 2007.
  • A surprisingly robust surplus in household finances will prevent price falls and enable the market to continue growing at relatively modest rates for the next decade.
  • We are forecasting growth of 15% for prime central London in 2007. The South East mainstream markets will see the highest growth in 2007. Southern markets will show highest long-term growth.
  • An expanded private rented sector has stabilised the housing market and increased economic stability through increased labour mobility. It has also provided accommodation for the 600,000 new immigrants that arrived into the UK in 2005.
  • Residential income streams should attract longer-term institutional investors who may build to let.
  • The globalisation of property markets will mean more investment in UK residential property as overseas funds get in on the act and the UK investment herds follow.

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Contact Information

Yolande Barnes
+44 (0)20 7409 8899
ybarnes@savills.com
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