UK house price growth to reach 12%
THE housing market is now fully in recovery mode, according to CBRE’s latest Regional Land report.
After several years of minimal growth, it is expected that UK house prices will increase by 12% in 2014 before the rate of growth slows towards the end of the year.
The housing market will remain strong over the next five years, underpinned by an improving economy and an underlying lack of supply. Positive house price growth will continue across the UK from 2015 to 2019 at a more sustainable rate of 30% with London, the South East and the South West predicted to record the highest regional increases.
Commenting on the regional market, Steven Verity, senior director of land and development at CBRE, said: “There will be sustained growth in the regional markets in all areas from suburban land and housing to city centre accommodation. The first major regional PRS deal looks set to happen in Manchester in the next three to six months, with Leeds not far behind. These deals will bring about a whole new mechanism for housing delivery as institutional money finds its way into residential investment. Following these first PRS deals we anticipate more to follow as investors chase attractive yield positions. This of course, is great news for the regional market.”
Jennet Siebrits, head of residential research at CBRE, said: “The sharp house price growth we have witnessed over the last year is typical at the start of a recovery, due to the release of pent-up demand. However, this rapid rate of growth tends to subside as the recovery becomes firmly established. As a result, we expect to see house price increases return to more sustainable levels over the next five years.
“London has dominated the housing market in recent years and recorded particularly strong house price growth, but there is now an evident ripple-out effect with increases recorded across all UK regions. While growth has generally been lower outside of London and South East, we expect some element of catch up from the other UK regions to occur over the medium to long-term.
“Affordability is the key going forward and mortgage payments as a share of take home pay currently remain relatively favourable when compared with long-term trends, which partly reflects the low interest rate environment. When interest rates start to rise, we expect it to be at slow and considered increments so the impact on mortgage affordability may be quite minor and contained.”
