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London, 12 January 2015 - As we enter 2015 we expect external factors to be broadly supportive of the UK housing market and as a result have predicted UK house price growth of 4% for 2015. We predict growth in Prime Central London will stand at 1.5% but it is the South East and Greater London that will see the greatest rises of 5% and 5.5% respectively. We forecast that transactions across the UK will increase from current levels and then stabilise at around 1.13m pa. We expect housing completions in England to grow from around 120,000 to 150,000 pa over the next five years, still vastly below the level of supply needed to meet demand.
The election year backdrop means that the housing market will not be far from headlines, as the affordability challenges make it a top political priority. Core to this year's JLL forecasts are an expectation of market stability over the medium term. Prime markets in particular will experience moderate short-term disruption from May 2015 Government elections and targeted taxation proposals for high-value property, but ultimately the backdrop of improving economic growth will support higher salaries and appetite for housing over the medium term. JLL's exclusive polling with Ipsos MORI shows a real concern about high house prices within society as a whole, but with a lack of clarity over what can or should be done to counter this problem in the long-term.
Adam Challis, Head of Residential Research at JLL comments: “The longer-term requirement for higher rates of new home supply continues to remain elusive. We are in a period of cross-party resolve to tackle the growing housing crisis and this is expected to take centre stage in the run-up to the general election. However, right-sizing the industry to meet England’s need for an extra 250,000 homes each year must be about more than throwing ideas and money at the problem.”
JLL examines the main supply solutions for their efficacy and challenge the sums attached to these ideas, and as you will see in the chart below, some can make a real difference:
There are plenty of viable options on the table but many are hampered by a time-limited approach; they address the short-term constraints but do not provide the industry with structural support that will enable higher rates of supply in the long-term.A lasting solution needs to address the skills shortage and to find a way for housing delivery to be more resilient from market cycles. Builders ultimately need to build and supply chains are likely to take another couple of years before ‘normality’ can resume.
Head of Residential Research
+44 (0)207 399 5324
Associate Director - UK PR
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