London house prices will plateau completely in 2016, according to five-year forecasts from Savills.
Average UK house price growth has exceeded all expectations over the past year, leaving some markets with reduced capacity for further mid term growth, the international real estate adviser says.
Savills today released its revised five-year mainstream market forecasts taking account of growth seen in the first half of 2014.
It now expects average annual UK house price growth to settle at 9.5 per cent this year, ahead of the 6.5 per cent originally forecast.
This will be followed by 4 per cent growth in 2015 and 25.7 per cent overall in the five years to the end of 2018, just fractionally higher than 25.2 per cent originally forecast.
So far this year, house price growth in London, the South and East of England has significantly exceeded forecast, with all expected to end the year well into double digits.
Price growth in these mortgage-dependent mainstream markets remains high, though there are signs that demand is weakening, with lead indicators suggesting a change in sentiment in London.
However while Savills predicts 2016 will see prices in London remaining flat, it expects growth to slowly pick up again over 2017 and 2018.
Regional figures and forecasts
The markets of the South and East of England were all originally forecast to show marginally higher levels of growth than London in 2014 (+7 per cent), but have in fact underperformed the capital to date.
Nonetheless, they too are now expected to end the year in double digit growth.
These markets are still expected to show the strongest five-year growth, outperforming London, as evidence mounts of the flow of buyers and equity out from the capital. The Midlands and the North have the potential to outperform London, Savills says.
