Anyone who follows the UK's plethora of housing market statistics is sure to be under the impression that times are a little tougher and house price growth isn't what it was. With multiple, highly regarded and regular indexes reporting monthly house price declines and a slowdown in annual house price inflation, it's easy to see why. But, a study from Barclays suggests some upside for property prices is on the cards.
Barclays' property price predictor estimates the average UK residential property price will be 6.1% higher in 2021 than in 2017. And, the lender says that price growth will be driven, in large part, by Buy-to-Let (BTL) investors and High Net Worth Individuals (HNWI).
While London in particular, is experiencing multi-month price declines in some regions, Barclays thinks this won't last. As such, no less than nine regions in London and south-east England make up the top 20 hot spots, it identifies in its report.
Richmond-on-Thames leads the way as the number one property hot spot between now and 2021. House prices there are expected to rise by an average of 6.8% per year, resulting in the average property price for that area being 32.1% higher in 2021 than in 2017. St. Albans follows with prices anticipated to increase by a total of 38.8%, and third on the list is Three Rivers, where property should be worth some 34.6% more in five years' time.
Northern regions also feature in the top 20 hot spots, making up a quarter of regions named by the bank. Warwick in the West Midlands is forecast to achieve an annual average price increase of 5.31% with property worth 29.5% more in 2021 than today.
Barclays also reports that millennials are more confident in investing in property than those aged 55 or over. Rental yields make up almost half, or 48%, of total annual income of those investors aged under 55. And, looking ahead, 23% of those under 55 plans to add to their portfolio, compared with just 7% of those over that age.
The draw for younger investors is rental income, rather than property value growth. Indeed, some respondents estimate rents could rise as much as 20% in some areas.