Forecasts on Growth and Unrelenting Shortage of Homes in England

Forecasts on Growth and Unrelenting Shortage of Homes in England

14 Jan 2019

Halifax December data claim the housing prices rose 1.3 percent in the three months through December. The report claims the prices rose unexpectedly in two years, in the last month, at one of the fastest rates, despite, Brexit volatility. Halifax forecasts on 2019 claim the property growth rate to be in the range 2 to 4 percent that will be stronger, in comparison to, 2018, but will remain subdued. It is assumed the growth may be sluggish amidst weak wage growth. There are many factors influencing growth such as Brexit, economic uncertainties and inflation. 

According to Halifax, the average cost of homes in Britain is £229,729, although, the prices vary from one region to another. The prices have fallen in London and South East regions, while prices grew in the North West and Midlands. 

Foreign Investment in London - JLL 2019 Forecasts

JLL figures state 79 percent of Central London acquisitions were made by foreign investors in 2018, and the UK is expected to remain the key destination for global investors in 2019. JLL claims the total investment value in the year will be around £55 billion where investors will target prime London real estate.

JLL’s head of UK research, Jon Neale said ‘No deal Brexit is unlikely, although, uncertainty persists. There may be delays and complications, in decision making.’ He expects Pound to strengthen after the deal. The UK had one of the strongest cross border inflows in 2018, and JLL forecasts the growth to be 1.7 percent in 2019, assuming the deal is achieved. In 2018, the growth was 1.3 percent.  

Other Reports 

The nationwide report claimed a growth of 0.5 percent in December, which is the lowest annual growth rate since 2013.  Its report states 2018 was one of the worst years, since 2013, where consumers remained restrained as the business, manufacturing, and construction remained slow. 

House price increased, on an average, by 0.5 percent, in the last year as per NBS data.  Household confidence was low since 2013, where the policy makers are insisting on an increase in domestic inflationary pressures. 

Although new homes sale grew in other parts of the country, Savills claimed the total value of housing stock was £7.29 trillion in 2018, where most gains came from regions other than London. Its report states - the biggest gains in value were reported in Wales where the value increased by 6.3 percent in 2018. The value of the house in East Midlands grew 6.2 percent and the West Midland home price grew 6.1 percent. 

Lowering the Housing Stock 

Growth in construction and manufacturing slowed by 0.1 percent in Q4 2018 (as per HIS Markit data) and retail spending was low due to uncertainties over policy changes by the Bank of England, where it may announce decision on interest rates and inflation, creating further doubts, particularly, where the exit itself is irresolute and affected by trade barriers. The pound fell and inflation continues to grow. 

A recent data by the Resolution Foundation reported the ratio between stock and family units is lowest since 1991 where only 845 homes are available for 1000 families. In 1998, the ratio was 867 and it was 825 in 2016. 

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