Cumulative growth in UK prices will total 20.3% in the five years to the end of 2020, according to Knight Frank’s latest UK Residential Market Forecast.
The forecast also predicts that higher transaction costs will continue to weigh heavily on activity and price growth in the prime London and prime country markets in 2016. This comes as the market continues to absorb the stamp duty changes George Osborne introduced in December 2014.
Despite this, prices in prime central London are expected to grow by 2% in 2016 and 20.5% cumulatively by 2020.
As for the biggest risks facing the UK housing market, the possible rise of interest rates from historic lows of 0.5% (something that has been mooted at times by the Bank of England), and more rapid rises than expected, is one major issue. Furthermore, a slowdown in activity of the global economy could also have an adverse effect on the property market in Britain.
“The price differential between most prime markets and the capital is likely to underpin price growth in 2016,” Liam Bailey, Global Head of Research at Knight Frank, commented.
“As the economy continues to recover and house prices outside of London show further growth, the trend for more London buyers to move will gain traction, boosting the ripple effect from the capital.”