The medium to long term outlook for UK residential property is positive with the demand for rental homes as well as purchasing growth being fuelled by international investors and property buyers, urban residents, and families planning to upsize their homes. 

In the short term, Britain's residential real estate is expected to moderate slightly given 12.3 per cent growth on average over the previous 18 months, according to Savills data. Key drags inducing this deceleration include the removal of institutional supports such as the stamp duty holiday, the  modification of Help to Buy scheme such that it is only now accessible to first time buyers, as well as an undersupply of homes to the market. 

Ongoing growth, albeit at lower levels, is still anticipated given the low costs of debt and heightened urban demand returning in the lettings space in particular. The return of both students and  working professionals has emboldened landlords. A recent survey by the RICS revealed the most significant gap in recorded history between tenant demand and rental supply. 

Savills predicts a rise in the UK rental inflation, which is in line with income growth of 19.9 per cent, over the next five years. In London, this will be at a slightly higher rate, at 22.2 per cent, by 2026. Meanwhile, mainstream UK residential real estate prices are anticipated to grow 13.1 per cent over the same period. Top performers will include regional growth in the north of the country as well as segments of the capital such as prime central London on account of international demand. 

In the interim, key aspects of the market cycle will shape the property sector. These include changes to interest rates expected from the Bank of England, changes to tax incentives and planning permissions to incentivise construction, and changes in both buyer and rental demographic profiles. Whilst recent market dynamics were characterised by upsizers, typically able to leverage existing equity for mobility, there has been a shift towards increased transaction activity from buy-to-let investors and first time buyers in particular.