LONDON, 1 November 2017 — The UK housing market is adjusting to varying levels of political and legislative change, but ‘The New Housing Paradigm' is about a bigger, structural shift.
A range of factors are colluding to deliver more moderate UK house price growth over the next five to ten years. However, and despite the intrusion of Brexit, we believe this transition will provide a more stable and healthy UK housing market.
JLL forecasts UK house price growth averaging 2½% pa for the next five years which will lay the foundations for lower UK housing market volatility in the medium-term.
• Moderate UK house price growth averaging 2½% pa over the next five years, which will support lower volatility in the UK housing market
• Brexit will continue to drag on the UK housing market in the short-term
• The New Housing Paradigm is good for government, the economy, buyers, sellers and industry participants
• UK transactions will improve modestly, averaging 1.23m pa over the next 5 years
• UK housing starts to remain buoyant averaging 206k pa over the next 5 years
The London market
Across Greater London, affordability will be the overriding factor. The Bank of Mum & Dad will continue to assist and UK and overseas investors will play a lesser role going forward as investor stamp duty and income tax changes impact on returns. But a strong economy, especially post-2019, will drive housing demand and push up activity.
In Central London we expect demand for new developments to remain muted but steady over the next two years until the Brexit road becomes clearer. A bedrock of demand will continue from domestic owner-occupiers supported by a steady stream of international buyers and investors.
Activity in Prime Central London will be subdued for the next two years with continued pressure on pricing especially at the top end of the market where stamp duty impacts are greatest.
Muted house price growth across all London markets is forecast during 2018 and 2019 and although activity should pick up from 2020 as the Brexit dust settles, our forecasts are more modest than in previous years. That said we do see upside potential in London as it continues to be attractive to both international and domestic purchasers.
Adam Challis, head of residential research at JLL concludes: “The period of great capital boosts to the housing market is ending and adjustments will need to be made. Digital construction - that is to say, a combination of Building Information Modelling, Off-Site Construction techniques, and active management of lifecycle costs to generate customer and business intelligence - will play a role. Our new report - JLL Forecasts: The New Housing Paradigm - considers the impact of these changes and forecasts how the UK housing market will perform in 2018 and beyond.”