The capacity for house prices growing in London over the next five years is limited, according to property giant Savills, while Scottish and Northern prices are set to soar.
By 2030, prices in the North West of England are expected to rise nearly a third to sit just 15 per cent below the UK average, narrowing from a near-30 per cent gap in 2020.
London prices, meanwhile, are set to increase just 13.6 per cent to 33 per cent above the average – down from 70 per cent in 2017.
“Since 2016… the more affordable regions in the North and Scotland outperform[ed] the UK average, and capacity for growth in London and the South is more limited,” Dan Hill, research analyst at Savills, said.
“In the absence of any whole market price correction, this pattern is likely to persist for the next five years,” he added.
London prices aren’t expected to grow at all in 2026 and remain below the rest of the UK every year up to 2030.
Why are London prices lagging?
After two decades of sure-fire growth, house price growth in London has been weak this year – inner London prices fell by 2.1 per cent in July month on month, according to Rightmove.
While demand for housing hasn’t collapsed, it’s not been strong enough to drive prices up, with recent changes like the removal of stamp duty relief having a disproportionate effect on the affordability of a first time buyer in the capital.
Instead, buyers have been looking further afield to Manchester and Newcastle, which offer much more affordable housing as well as strong growth.
In fact, the cost of London’s housing pushed England’s affordability ratio above the 30 per cent affordability threshold in 2024, despite most English regions being below the figure, according to the Office for National Statistics.
Nearly half of the capital’s 25-45 year olds are ‘ready to leave’ over unsustainably expensive housing, according to a new study.
“The pressures facing not only young Londoners, but those into middle age, have deepened significantly over the past two years,” Paul Rickard, chief executive officer at Pocket Living, said.
The affordability problem factor, alongside the return of sellers who delayed moves due to market uncertainty, has left a glut of houses for sale in London and shifted the scales in favour of buyers.
The number of homes for sale is around a fifth higher than a year ago, Rightmove has found.