Brexit is expected to be a dominant factor in Britain’s housing market in the coming years.
Home prices in the UK are expected to increase by 0.5 percent in 2017 and a further one percent in 2018, on the back of greater uncertainty and a slower economy resulting from the Brexit vote, revealed property consultancy JLL.
With uncertainty causing some households to defer home buying decisions, transaction levels are predicted to drop by 11 percent from 1.22 million this year to 1.08 million in 2017. Nonetheless, JLL expects the softer market conditions to encourage more first-time buyers to get on the property ladder, given the attractive interest rates.
“We are expecting UK housing markets to slow from current levels both in terms of transactions and price growth next year. This will be driven by Brexit uncertainty and a slightly softer economy,” said JLL Residential Research Director Neil Chegwidden.
“The outlook, however, is particularly unpredictable presently. Over the next couple of years, we expect periods of volatility in terms of household and business sentiment as the Brexit roadmap unfolds, but the underlying shortage in supply will provide support in value terms.”
By 2021, house price growth is forecast to rise to five percent per annum as greater certainty returns.
Meanwhile, JLL has expressed concern over Brexit’s impact on housing supply. And while it welcomes new rhetoric from policymakers both in London and nationally, JLL believes it will be difficult to maintain the present levels of housebuilding considering the underlying conditions.
In fact, JLL reckons that housing starts in England will fall from about 140,000 homes this year to 134,000 in 2017 and in 2018.
At the same time, housing starts in London are expected to slip to 16,000 next year, from the current 18,000.
Chegwidden noted that new leaders Theresa May – the current Prime Minister, and London mayor Sadiq Khan, have expressed concern over the shortage of new housing supply and affordability.
“We know that both are actively seeking answers, and it will be interesting to see whether policy initiatives target short-term supply improvements or look beyond the immediate horizon to create lasting, long-term solutions,” he said.
“Given the likely Brexit uncertainty over the next few years, we believe that policymakers will be wisest to look long-term.”
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
