House price growth across region expected to be above UK average
Yorkshire & the Humber will see house price growth of 3.5% in 2018, above the forecast UK average, according to a new study.
PwC’s latest UK Economic Outlook said that the average Yorkshire & Humber house price is estimated to rise from £155,000 in 2017 to around £201,000 by 2025.
Meanwhile, annual UK house price growth is projected to slow to around 3% in 2018 and is likely to remain around this level until 2025, according to the new analysis from PwC.
The average UK house price is estimated to rise from £221,000 in 2017 to around £285,000 by 2025 according to PwC’s projections. Price growth at this pace means the ratio of house prices to earnings is likely to remain broadly stable, but still at high levels by historical standards.
In London, however, the average house price could drop by nearly 2% in 2018 compared to last year and house price inflation could continue to be negative in 2019.
Ian Morrison, PwC’s Yorkshire & North East regional leader, said: “The buoyant housing market reflects the strength of the Yorkshire & Humber regional economy as a key growth area in the UK. We are seeing the region fast become a destination of choice for many businesses which is having a positive impact on the economic growth of the region and regional housing markets.
“Whilst strong house prices are good news for many, we must continue to build much-needed homes across a range of housing tenures to make sure the market remains open to those who are not yet on the housing ladder.”
Past rises in UK house prices have been driven by a number of factors, but one of these has been a lack of new housing supply. PwC’s new analysis at the local authority level across England suggests a clear link between a lack of new housing supply, relative to population growth, and local house price growth since 2011.
Looking ahead, if the government can achieve its target of building 300,000 new homes a year in England by the mid-2020s, then this should exceed the increase in housing demand from projected population growth and therefore start to make up the backlog from past under-supply. But PwC’s local analysis suggests that many of these homes need to be built where demand is highest in London and the South East and the East of England to prevent a further worsening of affordability in those regions.
PwC’s senior economist, Richard Snook added: “Local targets need to be set and met for house building, linked to supporting infrastructure development, as well as national targets. Building new homes in the wrong places will only perpetuate England’s housing supply problems.”
