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Regional house price growth may outshine London over the next 5 years, KPMG finds

Regional house price growth may outshine London

Higher house price growth could be found outside London over the next 5 years, according to the latest house price projections analysis carried out by KPMG UK.


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Higher house price growth could be found outside London over the next 5 years, according to the latest house price projections analysis carried out by KPMG UK.

The analysis revealed that the house price growth in the South West and West Midlands was projected to grow the most, at an average of 4.3% and 3.8% respectively over the next 5 years. Meanwhile, the North East and London were projected to grow the least, at 1.9% and 1.5% on average respectively. 

Commenting on the house price projections, Yael Selfin, chief economist at KPMG UK, said:

“There has been some evidence of weaker pricing and lower turnover in some sections of the UK residential property market. The combination of rising interest rates, relatively subdued UK economic growth, and Brexit-related uncertainty will put some downward pressure on pricing in the short-term.

“Looking over the longer-term, valuations are likely to play a larger role in shaping house prices. In London – where prices relative to earnings are the most stretched – we expect to see prices rise by less than in other regions. Although shortage of housing stock is expected to support growth in the medium-term.”

Regional house price growth may outshine London over the next 5 years, KPMG finds - KPMG projections bar graph

Yael Selfin added: “Our projections also point at the disparity in regional performance continuing, with regions that are least overvalued at the moment remaining somewhat overlooked. Yorkshire and the Humber, North West, North East, and Wales could experience less spectacular growth for example than others, although their average percentage growth is still expected to surpass London’s over the next five years.

“Among the stronger performing regions we see over the medium-term, Northern Ireland, Scotland, and to a lesser degree West Midlands, are expected to be driven by favourable valuations. Meanwhile, positive long-term momentum is expected to continue to boost regions such as the South West, whilst continued supply shortages are expected to support price growth in the South East and pockets of the East of England.

“The UK residential housing market could be particularly interesting over the next few years, with potential winners and losers not always where you expect them to be.”   

Jan Crosby, UK Head of Housing at KPMG, added:

“This latest analysis reinforces the importance of local infrastructure and connectivity, which continues to be a crucial driver for house price growth. We are increasingly seeing that areas undergoing regeneration or those deemed ‘up and coming’ are noting rising house prices. These factors drive perceived attractiveness and ultimately create a virtuous circle of growth. 


“Policymakers need to recognise the impact rejuvenation and community can have on making areas attractive. They must facilitate new housing – and fast – but equally they need to match this supply in step with the evolving demand. As is evident, eyes should be fixed on the regions as much as on London.”




Notes to editor:


For further information please contact:

Riku Heikkilä, CNC Communications & Network Consulting

T: +44 203 7551 622

M: +44 7976 326 263


Simon Wilson, KPMG Corporate Communications

T: +44 (0) 207 311 6651

M: +44 (0) 778 537 3397:


Jo Chileshe, KPMG Corporate Communications

T: +44 (0)121 232 3343

M: +44 (0) 791 9211 803


KPMG Press office

T: +44 (0) 207 694 8773

How we produce our house price growth forecasts:

Our forecasts are produced with a set of error correction models of regional house markets. An error correction model describes the dynamics in terms of long-run and short run changes. For this exercise, we made use of house price indices from Nationwide, and quarterly regional economic data from the ONS. Data on historic mortgage interest rates was sourced from the Bank of England.

In the long run, the level of the house price was determined by factors such as earnings, employment and the level of real mortgage interest rates. We have chosen to follow the approach of the national model used by the OBR (2014) taking account of past changes in the level of house prices to proxy for the effects of price expectations.

In the short run, changes in house prices are determined by changes in income and employment, earlier changes in house prices, and the level of disequilibrium in the long run relation.

The parameters of the equations are estimated using OLS and all coefficients have the expected sign and are statistically significant. Our forecasts of the explanatory variables make use of publicly available forecasts as well as forecasts produced by KPMG macroeconomics.

House Price Growth 2018 – 2022 (highest to lowest)





 Average annual growth in

 national prices, 2018-2022

South West 4.3%
West Midlands 3.8%
South East
Northern Ireland 3.7%
East of England 3.5%
East Midlands 3.4%
Scotland 3.3%
North West 2.4%
Yorkshire and The
Wales 2.2%
North East 1.9%
London 1.5%


About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 14,500 partners and staff.  The UK firm recorded a revenue of £2.2 billion in the year ended 30 September 2017. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 152 countries and has 189,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.


© 2020 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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