Residential Roundup - 16 February

Despite 2023 feeling like an age ago, the lag in data coming through from government means we have only just got our hands on Q4 GDP figures. Economically we continue to walk a tricky tightrope. Spend enough not to plunge the economy into recession, while not spending too much and driving up inflation. The Q4 figures show consumers cut back, with energy and stubbornly high food bills meaning fewer splashed out in the run up to Christmas. Concerns over demand and costs also saw manufacturing and construction activity fall in Q4.

These figures confirm the UK fell into a (shallow) recession in the second half of 2023, with the latest figures from the ONS showing GDP fell by -0.3% in the three months to December. This followed a -0.1% drop in Q3, meeting the threshold of two consecutive quarterly falls to put the UK in recession.

The ONS expects full year figures will show a marginal rise in GDP of +0.1% for 2023, albeit still provisional for now. This would mean GDP growth below consensus forecasts of +0.5% back in December, but up on where forecasters thought the economy would end the year back in January 2023, when the consensus was for falls of -1.0%.

UK inflation held at 4% in January, just below expectations (it was marginally above forecast the month prior), meaning that inflation has hovered around 4% for three consecutive months. Oxford Economics forecast “considerable downward momentum” on CPI in the coming months, expecting it to reach the 2% target in April. Similarly, the Bank of England’s own forecasts expect inflation to hit 2% in Q2 before rising again to around 2.25% in the second half of the year.

While this is encouraging for all of us counting down the days until the Bank of England announce a rate cut, the Monetary Policy Committee will also be considering pay growth. Total pay rose 5.8% in the final quarter of the year, trending down but still above expectations. Indicating we might be waiting a little longer before we see a rate cut.

Further afield, we are keeping an eye on the impact of the disruption to shipping through the Suez Canal, but the magnitude of this impact is likely to be limited (economically). Oxford Economics have forecast the disruption will add just 0.4ppt to inflation in Europe this year, while Goldman Sachs estimate a global inflation impact of just 0.2ppt.

Housing market

When reporting on the rental market it is worth bearing in mind that significant increases in rents last year mean even high single digit increases this year are often reported as a slowdown, when in historic terms they still far exceed the long run average. As a case in point the latest survey results from the RICS show the most modest rise since January 2021 in the net balance of agents reporting an increase in tenant demand, albeit at +28% far more were still seeing an increase rather than a fall.

The ONS Index, which covers both new and existing tenancies recorded annual growth of 6.2% in rents in the year to January 2024. For new lets the rate of rental growth has been slowing for several months, cooling to 7.5%, the lowest level since September 2021 (but still high historically) according to Homelet. London’s rental growth, which recorded the highest annual increases in 2023, has eased, with annual growth of 4.6% in January 2024 below every other UK region.

Both transactions and mortgage approvals are running below their long run trend, with 27% fewer mortgage approvals and 14% fewer transactions in December 2023 than the five-year average.

But activity appears to be increasing in 2024. The January RICS Survey reported an uptick in new buyer enquiries and agreed sales. The outlook for the next 12 months is improving too, with a net balance of +44% of respondents expecting sales volumes to increase over the coming year.

Here at JLL we have seen a 20% increase in buyers registering so far this year compared with the same period in 2023. A trend which appears to be replicated in the wider market, with Rightmove reporting a 16% annual increase in buyer enquiries in January 2024. House price growth is trending upwards in every index we track, although so far only Halifax is showing house prices rising annually.


A new report from JLL Research looks at the challenge of retrofitting homes. 84% of new homes have an EPC rating of A or B, but for existing homes this falls to just 4%. To bring our housing stock up to EPC C has an estimated average cost of £35,000 per property, which equates to more than 10% of the average house price in over half of local authorities across England and Wales.

Click here read more JLL Decarbonising UK Housing.

JLL is also part of the UK Green Building Council (UKGBC)’s Upgrading Britain’s Homes coalition. The coalition champions scaled-up investment and national policies from the UK Government that will drive a transformational programme of retrofit to improve energy efficiency and reduce energy bills for homes. You can find out more about the coalition and the potential return on investment in terms of energy bills, climate emissions and public health via the retrofit calculator here.

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