A new market update from Savills has found that, as quarterly growth continues to slow, the North and the Midlands are being affected the most. These are the regions which underwent house price growth at the end of the last cycle: ‘Regions which were the last to benefit from the latest upturn in the housing market cycle, namely the Midlands and the North, appear to be the first to be affected by a change in market sentiment (with a possible exception in the North West),’ says the report.
Year-on-year growth is still expected to be healthy, as the authors predict an average countrywide figure of around 7%, and slow growth continuing into 2008. ‘Whilst this year we have seen strong growth in the first six months, followed by a real slowing in the second half of the year, in 2008 we expect to see low growth and turnover for at least the first half of the year given continued affordability constraints,’ said Lucian Cook from Savills.
Going into next year, the top end of the market – including Prime Central London and the country house market – is expected to continue to do very well although, inflation is unlikely to match the figures achieved early this year. ‘In 2008 we expect the froth to come off the market and for demand and supply to be more closely aligned,’ continued Mr Cook.
‘This said we will see prospects for growth in 2008, particularly in Prime Central London, which is expected to outperform the general market, particularly at the very top end where a flow of overseas buyers will continue. At this stage we expect house price growth to be within a range of 6% to 8% for Prime Central London in 2008 and 4% to 6% for Prime Country Houses.’