Prime Markets

The rarefied prime housing market of central London continues to look good value in a historical context and is expected to benefit from an increase in overseas demand as international travel picks up. That presents the prospect of a strong burst of house price growth next year, though a general election in 2024 could interrupt a more sustained recovery.

More generally, the equity-rich prime housing markets are less dependent on mortgage affordability and interest rates. But the prospect of an increased tax burden for wealthier households tempers our view on the levels of growth in the more domestic part of the market.

Across all markets we expect to see the change in working patterns underpin demand in suburban and more rural areas further away from major employment centres, albeit to a lesser degree than we have seen in the past year and a half.

You can read more about the prospects for the prime housing market in Prime Residential Property Forecasts.

Prime residential forecasts

Five-year house price forecasts

Mainstream Markets

While all regions have seen upward pressure on prices since the market reopened in June 2020, it has been strongest across the markets of Wales, Scotland and the North of England. That was to be expected at this point in the housing market cycle, even if the extraordinary levels of growth seen in some parts of the country were not. 

And if historical trends are anything to go by, the north-south divide in house prices looks set to close further over the next five years. The Government’s levelling-up agenda has the potential to play to this, though it is much less clear whether it will have a material effect on prices during our forecast period.

The potential for price growth looks particularly constrained in the London mainstream market, which has become  increasingly confined to more affluent households. That reflects the extent to which London prices became dislocated from the rest of the UK housing market from 2005 to 2016, something that continues to have a bearing on our price expectations. However, housing supply in London remains far below need. New developments, particularly those in areas connected to both employment centres and green space, will continue to perform well.

Mainstream residential forecasts

Five-year house price forecasts