The residential property market in the UK tends to be cyclical, moving in upward cycles of boom, bust and stability, and that trend looks set to continue, according to a new report.
Despite the recent slowdown in house price growth across many parts of the UK, particularly in the south of England, Barclays Bank forecast that home prices offer plenty of room for growth moving forward.
The bank estimates that the average price of a house or flat in the UK will increase by 6.1% by 2021, fuelled in part by greater activity among buy-to-let investors and high net worth individuals
Barclays predict that property hotspots will emerge in the north of England thanks to employment opportunities and business start-up rates, but it ultimately expects to see price growth in London lead the way.
Barclays projects that the average price of a home in London will rise by 11.88% by 2021, followed by the East of England with growth of 9.38%, the South East up by 8.74%, the East Midlands up 6.67%, while Scotland and the West Midlands are both estimated to see values jump by 5.88%.
The South West, North East, North West, Yorkshire, Humber, Northern Ireland and Wales are also expected to see home prices increase, albeit at the reduced rate of 5.31%, 5.31%, 4.01% and 3.6%, 3.04% and 2.88% respectively.
The study also found that an increasing number of property investors are looking north for better value for money and higher yields.
Some 38% of high net worth investors looking to purchase property in northern regions think that property prices are going to increase there, with 27% of those who plan to buy citing strong rental income as the primary reason to invest there.
The study suggests that younger investors will be a key driver in the growth of the UK housing market over the next three to five years, with the millennial investors surveyed having 41% of their investment portfolio tied up in property, compared to 23% among those aged over 55.
In fact, millennial investors are reaping the financial rewards of multiple property ownership with almost half - 48% - of their annual income generated from rent, according to Barclays.
Dena Brumpton, chief executive officer of Wealth and Investments at Barclays, commented: “It’s encouraging to see that property is still viewed as an important part of the investment portfolio with high net worth investors typically owning three properties and over a quarter planning to buy property because they believe that it offers long term investment security.
“There is also increasing confidence among property investors, as many are taking a long-term view when it comes to putting money into property.
“It’s also interesting to see from our research how investment prospects are emerging outside of the established property heartland of London and the South of England, with economic growth and employment opportunity fuelling growth in hotspots across the UK.”