Good news for investors in prime areas outside centra...

Estate agency Savills has upgraded its forecasts for the UK’s prime housing markets - good news for investors in this niche.

The agency says its revision is to reflect the impact that the extended stamp duty holiday and the increased availability of mortgage finance have had on the niche sector across the UK.

Savills now expects prime housing markets outside of London to grow by 9.0 per cent this year - up from the agency’s initial forecast of 5.0 per cent.

It says this is on the back of four consecutive quarters of robust house price growth with an average of 8.5 per cent rises on average.

Thanks to the Covid-inspired ‘race for space’ - a bigger factor for the wealthy investor and buyer than for the mainstream market - £2m-plus prime country houses and coastal markets have seen substantial surges in demand. With limited supply this has triggered annual price growth of 12.9 and 14.6 per cent respectively.

By contrast Savills admits that in prime central London - while activity has remained robust - “this is yet to translate into any meaningful price growth.”

Values have increased over the past year for the first time since late 2014, before the stamp duty overhaul, though only by a marginal 0.5 per cent.

In particular, it warns that the prime central London flats market has lagged as it tends to be more dominated by those from overseas and those seeking a pied-à-terre for use mid-week.

Domestic buyers and London-based international buyers have focused their attention on houses with outside space in a bid to upsize during the recent race for space.

Savills expects prime central London prices to start rising more significantly in the second half of 2021 and end the year with 3.0 per cent gains - actually downgraded from the agency’s earlier 4.0 per cent prediction.

It says this will be followed by a strong 8.0 per cent bounce in 2022, prompted by increased international arrivals.

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