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JLL releases its national house price forecasts
South West, 5 November 2015 – A period of sustained growth and stability in the South West housing market is expected in 2016 as activity levels respond to supporting factors such as real wage growth and record low mortgage rates. Sound fundamentals are driving a confidence in the market not seen since 2007 and whilst Government initiatives aimed at boosting supply are all very evident, the push for homeownership may exacerbate a housing divide between those who can afford to buy a home through Help or Buy or Starter Homes and those who can’t.Commenting on the house price forecasts Charles Kislingbury, lead director at JLL Exeter and head of residential land in the South West, says: “The UK market is expected to move steadily forward with an average growth of 5% in 2016. It’s encouraging to see that the South West market will be one of the strongest performers outside London and the South East.“However, for this to be sustained, the planning system needs to deliver and adapt to the region’s housing requirements. The region’s market needs a healthy supply of all housing types, particularly at the affordable prices at the starter end, to maintain these growth forecasts.”Looking at the rental market, Charles continues: “Demand for rental accommodation in the UK has accelerated quickly over the past decade and there is little to suggest this trend will run out of steam anytime soon. With supply constraints possible in the medium-term, we believe there will be additional upward pressures on rents over the next five years. Significantly, the number of rented households in the UK has escalated from just 2.3m, or 11% of all households, ten years ago to 4.4m, or 19.4% of all households today.”Current trends also suggest that the number and proportion of private renters are set to rise further in the medium-term, driven largely by housing unaffordability and onerous deposits. Government initiatives such as 20% discounted starter homes offer some hope for would-be young homebuyers, but this is unlikely to reverse, or even notably alter the strong upward march of the private rented sector, which is already the most active part of the domestic housing market. The final word: 2016 should provide a sounder base for British businesses, consumers, home owners, home buyers, renters and landlords following 2015, which was disrupted by the general election. We expect UK house price growth of 5% in 2016 with transaction volumes rising to 1.28m. Looking further ahead, despite the EU referendum and the likelihood of further interest rate rises, 2017 should be another year of positive economic expansion and improved household finances and confidence. This backdrop should lead to greater UK housing market activity, reasonably strong house price growth and a continuation of development volume growth in 2017.Overseas economies and unrest pose some risk but fundamentally the UK economy is in a stronger and more stable place than almost anywhere else in the world. Higher value London markets, which are being rocked by punitive levels of stamp duty, face an uneasy and vulnerable short-term outlook, but most regional mainstream housing markets are looking in good health. Positive economics and more secure household confidence and finances, alongside insufficient new housing delivery will place upward pressure on prices and will lead to more transactions.
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