Prime house prices in the south forecast to increase by 16.5% by 2029
Prime house prices in the south are expected to increase by 2 per cent in 2025, and by 16.5 per cent over the next five years to 2029, according to research by Savills.
The prime housing market is typically the top 5%-10% of the market in any region, reflecting an average property price of £1.85m. This area of the market in the south of the country saw an increase of 11.6 per cent in the five years to September 2024.
House price growth in the prime market is anticipated to be below that of the mainstream market in the coming five years, given tax changes introduced in the 2024 Autumn Budget. Savills forecasts mainstream house price growth for the South West of 2.5 per cent in 2025 and a total of 21.6 per cent in the five years to 2029.
“In a normal housing market recovery, you would expect the top-end of the market to recover first, responding quickest to a change in sentiment,” says Lucian Cook, head of residential research. “However, the additional stamp duty surcharge for second homes, changes in ‘non-doms’ taxation and VAT on school fees are likely to offset some of the impacts of future cuts in interest rates this time around.”
Ashley Rawlings of Savills Wimborne, adds: “Coastal second home hotspots are likely to remain fairly price sensitive next year. But elsewhere, prime regional housing markets are likely to benefit from some displaced demand as families look to strike a balance between house prices, commutability and access to schooling. And while increased exposure to inheritance tax is likely to mean a bit more stock comes to the market from downsizers, this is unlikely to upset the underlying balance between supply and demand.
“In Dorset, we continue to see demand for good quality family homes, including from buyers based in London and the Home Counties who are looking to relocate for the excellent schooling and lifestyle offer. Many have a connection to the area either through family, or they may have grown up and been to school here themselves.”