Property prices to outperform inflation by 40% in next decade, analysts say
Inflation beating property price growth will continue to be a feature of the coming decade, though at a lower rate than seen over the past ten years, according to analysts. Property consultancy Savills Research is forecasting that demand will be sustained by stock shortages but price growth will be constrained by more limited access to mortgage finance. It predicts 40% inflation adjusted growth in the mainstream property market over the next ten years, much more in line with the long term average. This follows inflation-adjusted growth of 71% in the noughties, a fall of 14% in the 1990s, and 43% and 49% growth in the 1980s and 1970s respectively. ‘We expect to see an ongoing pattern of much more sober lending in the next decade, a factor that will clearly set the next ten years apart from the pre-credit crunch noughties which saw very high inflation adjusted growth in comparison to the historic norm,’ said Lucian Cook, director of Savills Research. He believes that the legacy of the noughties will be a residential market split, possibly irrevocable, between the equity haves and have nots. ‘A regionalised market recovery is now inevitable with a ripple effect rolling out from the prime markets of London and the South East,’ explained Cook.
‘Our forecast anticipates sustained house price growth in the equity rich, prime hotspots from 2011 onwards with a significant lag in areas blighted by low levels of equity, high unemployment levels and the prospect of very slow economic recovery,’ he added. |
Recovery in London office rental market well underway but regions still seeing declines, report says
Office rents in London are expected to surge in 2010, boosted by rising confidence among financial tenants and tight supply, according to a new report. After falling up to 40% in the global financial crisis, prime rents in the City of London financial district could rise by 10% by the end of 2010 while those in the West End are forecast to increase by 7.6%, says the report from property consultants King Sturge. This would mean rents in the City averaging £47.50 per square foot and in the West End some £70 per square foot. The predicted improvement in rents may ease investor fears that the UK commercial property market's price rebound could be short-lived due to continued tenant weakness. Recent threats by banks and other financial institutions to shift offices from the UK to other countries with friendlier tax jurisdictions are likely nothing more than ‘sabre-rattling’, according to Mark Bourne, King Sturge's head of London Office Agency.
‘They are just using what they normally do, in terms of planning at the start of each year, to send a message to the government. The real impact on the UK market, I believe, will be negligible,’ Bourne said at a press briefing. |
