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Rental growth to outstrip sales price growth in next five years - Savills

In an otherwise-downbeat set of predictions for 2017 and beyond, Savills says that rental growth is likely to outstrip sales price growth in the next five years.

The agency - in its traditional end-of-year forecast for the next 12 months and beyond - says that as first time and 'second stepper' buyers struggle to access or trade up the market, demand for rental properties will increase.  

This means that rental growth will be stronger than house price growth both in the short term and over the five year forecast period.  

Average rents are forecast to rise by a total of 19 per cent, and 24.5 per cent in London.

But Savills also forecasts that landlord buyers - who now represent around one in 10 purchasers - will back off, at least in the short term, thanks to new taxes and the phasing out of some mortgage interest tax relief.

"Their transactions are expected to fall from 120,000 to 90,000 in 2021, and hit a low of 80,000 in 2018, suppressing levels of new private rented stock brought to the market" warns Lucian Cook, Savills' head of residential research.

He says the stamp duty surcharge introduced back in April will also continue to deter some buyers. 

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