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News Release

London

Jones Lang LaSalle 2013 pre-Budget Houseview


London, 20th March 2013 – Commenting on the 2013 Budget announcement due later today, Jon Neale, head of Research UK, Jones Lang LaSalle, said: “The Budget is likely to be a gloomy affair, orientated around the grim task of further reducing public spending given the poor performance of the economy and the consequent low tax receipts.

“However, stimulating growth remains firmly on the agenda, with the government focussed on stimulating the construction industry – which has persistently underperformed in recent quarters and is a key reason for such weak GDP growth. Construction – particularly house building – tends to have very UK-based supply lines, meaning that stimulus measures have strong economic multipliers and do not ‘leak out’ and increase exports.”

Jon Neale continued: “The UK is consistently ranked as one of the world’s most competitive economies, but poor infrastructure is always identified as a key weakness. While big ticket projects such as Crossrail and High Speed Two will make a significant contribution, it is unclear whether the package that will be announced will make a real difference.”

“Housing is likely to be the main route with which the Government will attempt to stimulate construction –while simultaneously appealing to younger voters who are priced out of homeownership and, increasingly, the rental market. The measures that have been trailed do not look radical and are likely to be extensions of existing schemes.

“The Government is clearly yet to be convinced that there is a case for a truly massive expansion in affordable housing delivery – an argument made on all sides of the political spectrum. If significant, such a package could significantly reduce the housing benefit bill, one of the largest components of the deficit.”

Adam Challis, head of Residential Research, Jones Lang LaSalle, added: “The Chancellor is desperately trying to offer succour to the British public, but there is very little he can genuinely offer.  With prospects for the next general election still very much in the balance for the Tories, the Chancellor needs to offer credible ideas that are deliverable quite quickly.  We believe that extending existing schemes such as NewBuy, FirstBuy and Funding for Lending may be the best way to drive positive results for the 2015 election campaign.”
 
Adam Challis concluded: “We expect to see specific support for the delivery of affordable homes. The chancellor’s increase of the cap for Right to Buy up to £100,000 will increase the need to ratchet up build rates significantly.  Facilitating institutional investment in residential is one area where the Government can deliver real results and has shown serious commitment to see Build to Let schemes become a reality.”