House prices were forecast to rise by 21.1 per cent over the five years with the UK average value expected to reach £279,644 by the end of 2025.
The rate of growth is expected to peak at five per cent in 2022, although the analysis excludes new-builds.
Transaction volumes were forecast to return to normal levels of about 1.2 million per year by 2023.
Savills forecast the strongest price growth over five years in the North West, at 28.8 per cent, and Yorkshire and the Humber, 28.2 per cent.
In London, growth was forecast at 12.6 per cent, and in the South East, at 17 per cent – supported by housing equity which would help to overcome income constraints.
“The outlook has improved since the beginning of the year,” said Lucian Cook, head of residential research at Savills.
“By extending the stamp duty holiday and the furlough scheme in last week’s Budget, the chancellor has significantly reduced the downside risks in the mid-year, while a recovering economy should support price growth towards the year end.”
Additionally, Savills expected mortgage interest rates to stay lower for much longer compared to the outlook before the pandemic.
“This means there remains capacity for medium-term house price growth despite the unexpectedly strong performance of last year,” Cook said.
Prime recovery
Prime residences in London and the wider country house market were tipped for continued growth. Prime central London price growth was forecast at 21.6 per cent over five years, prime outer-London at 14.6 per cent, and prime country 20.5 per cent.
Frances Clacy, residential research analyst at Savills, added: “Activity has already picked up more quickly than expected, with more £5m-plus sales last year than since 2016.
“It tells us that buyers believe in the future of London as a global city and supports our expectation that values will recover quickly as the city reopens for business and international travel resumes.”
