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North West house price growth to overtake prime London in 2015

JLL forecasts 3.5 per cent rise in the region next year

Manchester, November 2014 House prices in the North West are predicted to rise by 3.5 per cent next year, according to property consultant JLL. This compares to a forecast of 1.5 per cent in central London.Hogg, Stephen

However, the figure falls just below JLL's prediction of a 4 per cent increase for the UK overall.

The highest rates of growth in 2015 will be in Greater London (5.5 per cent) and the South East (five per cent).

JLL forecasts growth of five per cent in the North West in 2016 and total growth of 22.2 per cent over the next five years. Manchester and higher value areas in the region are expected to outperform this regional rate.

The consultant says that rising employment, strong economic growth and schemes like Help to Buy have all strengthened demand for housing. It believes the market is the strongest it has been in five years.

JLL argues that the biggest upward pressure on prices is now constrained supply. Housing starts in England have increased to 137,000 units a year but the number of new homes needed every 12 months is 220,000.

Even with JLL expecting the number of new homes coming on stream to increase to 150,000 over the next few years, it says this figure remains 'vastly below' the level needed to meet demand.

Commenting on the figures, JLL's lead director of regional residential, Stephen Hogg, based in Manchester, said: "The North West, like much of the rest of the UK, has seen a resurgence in demand and prices. Manchester in particular has been one of the country's star performers of the last two years and it will continue to do well.

"But we face a situation where a lack of supply is pushing up prices to a level where affordability and the ability to raise a deposit are once again becoming an issue, despite the valiant efforts of initiatives like Help to Buy.

"Addressing our long-term supply requirements is the real game-changer. This will mean tackling issues relating to planning, helping to release more land for development, and skills shortages within the construction sector itself.

"Fortunately, housing appears to be a big agenda item for each of the main political parties and so we're hopeful that whoever wins the next election will be ready to turn words into action."