Half year assessment of property price forecasts including Knight Frank, Savills and Chesterton

publication date: Jul 31, 2014
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
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Half year assessment of property price forecasts

Well we had a good look at rental forecasts earlier in the week, so now it’s time to review the property prices.

UK, England and Wales property price forecasts versus actuals June 2014
For the UK, Savills predicted a 6.5% increase and Jones Lang Le Salle a 5% rise. So far ONS prices (albeit May’s figures) are up by 5.5%, so both score some points for being pretty close!


From an England and Wales perspective, the actual statistics from the Land Registry shows a 6.4% increase. Knight Frank have done pretty well so far with a 6% increase, while Chesterton Humberts forecast of 8.2%, at the half year mark, suggests their forecast is a little high, but of course we are only half way through the year!

Find out what’s happening on your local property market

Country forecasts versus actuals for Scotland and Wales 
Wales so far have seen few high price rises, so just under 3% versus the 6% forecasts, while Scotland is up 3.5% versus forecasts of 4-6%, so again a little lower than expected.


Regional property price forecasts versus June 2014 actuals from Land Registry
Anyone paying attention to the newspapers, TV and radio at the moment would think we are in the grip of some sort of house price growth mania. We aren’t. Yes, some prices in London and other areas are going up quickly, but no more so than they have in the past.


Regionally, London forecasts ranged from Savills +7% to +8.4% from Knight Frank. But these didn’t quite meet the actual increase currently recorded at 16.4%!

Other forecasts though were pretty good:-

Region Savills Chesterton Humberts Knight Frank Actual
South East +7% +5.4% +7.6% +7.8%
South West +7% +4.4% +7.6% +5.4%
East of England +7% +4.7% +7.3% +7.9%
East Midlands +6% +4.3% +7.3% +6.4%
West Midlands +6% +4.0% +7.0% +4.7%
North East +5% +3.4% +6.7% +N/C
North West +5% +4.0% +7.0% +2.2%
Yorks & Humber +5.5% +4.0% +6.6% +3.4%

Quick guide to buying a home

Summary of house price growth versus forecasts
It’s clear that the forecasts for London were way off base, but those for the Midlands and the South were pretty good across the board. Only price growth in the North of England is currently lagging behind the forecasts – but there's still the rest of the year and prices started to rise later in these areas, so may still catch up.


Can you and I use the forecasts?
Yes we can. The best thing to do based on the above analysis is to take the highest and lowest forecast figures for the year and use them to work out if you are buying, selling or investing whether to do it now, or leave it until later in the year. You can then take the growth rates that we’ve seen so far too, so you have a minimum and maximum likely growth figure to work from.


Quick guide to selling

Case study example
However, if I was selling a property for £150,000 and buying a new one currently valued at £250,000, I might think differently. If I hang on for a year, my property might be worth £150,000 x 4.4% or 7.6% = £156,600 to £161,400. So I’d have an extra £6k-10k to put down as a deposit on the next property. However, if the £250,000 property went up by these amounts, I’d end up paying 3% rather than 1% stamp duty, which at a 7.6% rise, would mean paying £269,000, attracting stamp duty @3% = £8,070.


So in this case, I’d only earn as much on my existing property as I would then end up paying out in stamp duty taxes rather than putting it towards a deposit, so I wouldn’t gain anything.

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