Best grades of property will outperform market – Savills

According to Savills Research’s annual house price forecasts, the company is sticking to its prognosis that mainstream UK property prices will experience a "second slip".

But, it said, never have there been bigger differences in the outlook for the best properties versus the rest and for London and the South of England versus the North.

Mainstream values are now expected to fall by a total of -7.3% between mid 2010 and end of 2011 (and some of these falls have already occurred, with -3% expected to occur in 2011). This compares to total falls of just 3.5% expected in prime central London over the same 18-month period (with just -1.0% in 2011).

"Unlike the doomsters, we are not forecasting a deep double dip and there will be tiers of the market – like grade A prime London properties – that may well escape the downturn virtually unscathed," said Yolande Barnes, head of residential research at Savills.

"It is the detailed forecast that counts. We have not only varied our prognosis for different regions and for prime versus mainstream, but we have also varied them for the most desirable, owner-occupied properties (grade A) versus poorer quality, tenanted stock (grade C), compared to the average (grade B).

"These distinctions will make a big difference to longer-term performance and we expect markets rich in equity to operate very differently to those historically heavily reliant on mortgage finance."

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