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According to Jones Lang LaSalle's latest UK Residential Market Forecast
London, 27th May 2010 – While average UK house prices have proved resilient in 2010 with levels currently 13.6% higher than the trough in the market in Q1 2009, there are signs of price growth slowing, according to Jones Lang LaSalle’s latest UK Residential Market forecast. The forecast expects the annual rate of growth to fade during the remainder of 2010, ending down 1% across the UK and flat in the London market by the end of the year.
James Thomas, Head of Residential Investment and Development at Jones Lang LaSalle, said: “The recovery in UK house prices, which started during late-2009 with great momentum, surprised the market. Prices are now only 9.8% lower than peak values witnessed towards the end 2007. However, this recovery is now at risk as the political environment remains in a state of flux. The impact of structural changes to the national economy, aimed at curbing the national debt, has left buyers and sellers unsure of the right time to act. London and the South are likely to fare better and outperform the wider UK market as a result of global investment capitalising on the continued weakness of sterling but the new government’s emergency budget in June will have a significant bearing on existing stability.”
The forecast highlights the effects the result of the general election will have on the housing market. The plans to overhaul capital gains tax from 18% to at least 40% on non business assets, such as second-homes and buy-to-let property and the eradication of the Home Information Packs, which is likely to increase housing supply in the short term both present downside pressures on pricing.
Rob Bruce, Head of Residential Research, said: “Looking beyond 2010 we can expect 2011 to show signs of market stabilisation, allowing time for the economic recovery to be fully embedded by 2012. The outlook for the housing market remains strong over the medium-to-long term. Demand, activity and pricing will build through 2012-2014 encouraged by further lender and developer participation. By 2013 we can expect house price inflation to accelerate towards double-digits, partly fuelled by the structural undersupply of new housing in the UK.”
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