UK housing transactions tipped to hit 1m JLL

The UK housing market is expected to make steady progress throughout 2013 with accelerated growth from 2014 onwards, say Jones Lang LaSalle (JLL) in their residential forecasts released today. Looking at UK house price growth and UK housing transactions, JLL look at whether the market will improve over the next five years and the contributing factors that will influence this growth. Following a period of restrained growth in 2012, UK housing transactions will hit 1 million for the first time since 2007 with mortgage lending levels rising to 650,000 new loans. But despite the improvement, both will still be over 40% below peak levels and more than 30% below the 1998-2007 ten-year trend. New development will continue to be constrained, with approximately 115,000 completions being delivered in 2013, which meets only half of England’s housing requirement. UK residential property prices will rise by just 1% on average in the UK in 2013, with London and the South outperforming where growth levels are expected to increase by as much as 8% by 2017. The rest of the UK will experience slower growth, increasing on average by around 5% pa by 2017. JLL predict rental growth to increase by 3% for the UK on average with London outperforming again, growing by as much as 6% pa come 2014. We expect institutional investment activity in the private rented sector to gain traction as rental demand increases while mortgage finance continues to be constrained. Looking ahead to 2014-2017 JLL believe the economic recovery will be muted, but will increasingly fuel housing demand and trigger the release of some pent-up demand. That said, funding constraints will still mean growth in activity is hindered and even as transactions push towards 1.18 million per annum by 2017, this will still be 30% below the 2007 peak. Funding, affordability and demand issues will constrain housing development with less than 150,000 homes being built in England each year, even by 2017, well below the number required. Average UK house price growth of 4-6% pa will be restricted by demand constraints but the fuelling of higher price rises, especially in London and the South is probable given growing undersupply problems. The improved economy, income security and household confidence will take time to translate into higher household spending and house buying activity but the green shoots of housing market improvement should begin pushing through. Although the Funding for Lending scheme will cease in 2014, initiatives such as NewBuy will still be live and banks should begin to ratchet up their mortgage lending activities albeit heavily controlled. Development activity should start to gear up as developers and house builders become more optimistic but the scarcity of development finance will continue to stifle and undermine a speedy construction recovery. London will continue to lead the UK economic and housing market revival into 2014 and beyond, with
Article courtesy of Property Investor Today

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