The estate agent’s five-year prediction sees little change in transaction numbers over the period, hovering around the 1.15 million per year figure.
It also suggests affordability rather than Brexit will be the key limiting factor in the housing market.
Overall, Savills expects an average 14.8% gain in house price value across the country between 2019 and 2023, largely unchanged from last year’s prediction, but this will mask significant regional variations.
Savills predicts another year of price falls in the London market in 2019 while values in the south east and east of England will be unchanged, with growth failing to eclipse 2.5% each year after. (see graph below)
These three regions are expected to underperform the rest of England, Scotland and Wales significantly between 2019 and 2023 – potentially by as much as 17%.
In contrast the North West and Yorkshire and Humberside are predicted to see the strongest five-year growth – 21.6% and 20.5% respectively.
Values in the capital’s prime market will perform much more strongly, given price adjustments already seen in this market since 2014, the firm says.
Other regions were much slower to recover post-financial crisis with some only recently returning to peak values.
Therefore, Savills believes house prices are more affordable and have greater capacity for loan to income ratios to increase.
Transactions have fallen from 1.619 million in 2007 to around 1.145 million this year, but are forecast to remain stable over the next five years, though the market mix has changed.
Cash buyers now account for almost a third of all sales (31%) while parents and families are proving important to support first-time buyer numbers, Savills said.
Mortgaged first-time buyers, the only buyer group to have expanded since 2007 – from 359,000 to 370,000 this year – continue to be supported by Help to Buy and gifted deposits.
Numbers are expected to remain robust despite the less generous, more targeted Help to Buy, with a fall of just 2.7% anticipated by 2023.
Mortgaged home mover numbers have fallen dramatically since 2007 as existing home move home less frequently, down from 653,000 to 370,000, but having adjusted for stress testing of borrowing, are expected to remain constant over the next five years.
Buy-to-let buyer numbers will continue to come under pressure.
The property group noted that stamp duty and mortgage-interest tax relief changes have led highly leveraged investors to rationalise portfolios or pay down debt.
Savills head of residential research Lucian Cook said: “Brexit angst is a major factor for market sentiment right now, particularly in London, but it’s the legacy of the global financial crisis – mortgage regulation in particular – combined with gradually rising interest rates that will really shape the market over the longer term.
“That legacy will limit house price growth, but it should also protect the market from a correction.”
As it expected, nationally there has been modest growth with southern regions sluggish growth while midlands and northern regions have grown strongly, according to the Office for National Statistics data.
It also predicted a more targeted version of Help to Buy to emerge post-2012, which was confirmed at this week’s Budget.
And it had noted that this year would test the government’s appetite for delivering the right number of homes in the right place – a situation which appears responsible for the Homes England strategic plan.