UK house prices are set to grow by 22.8% over the next five years, according to JLL’s Building Foundations Report.
The agent said the baseline outlook for the UK housing market is for a steady rise in transactions and prices, and while overseas uncertainty may pose some risk, the economic fundamentals of the UK mean it is more stable than almost anywhere else in the world.
House prices are set to rise by 5% in 2016, owing to a more positive economic outlook, falling unemployment and real wage growth.
The forecasts suggest that the main threat to house prices in the short term comes from a rise in interest rates – expected in 2016 – though the gradual rise predicted should lessen any impact on the market.
Over the medium term, growth is set to ease gradually owing to growing affordability issues, while rates of construction will see little improvement.
Completions between 2016 and 2020 will grow only from 140,000 pa to 155,000 pa, peaking at 160,000 in 2018 and 2019, according to JLL’s figures.
Overall, the South East and East are expected to see the strongest growth in house prices over the next five years, at 26%, followed by Greater London at 24%. Prime central London is expected to grow by 17% – the lowest nationally.
Neil Chegwidden, director of residential research at JLL, says: “The two big counterbalances are the strong economy, and the affordability constraints – but do not underestimate the strength of a stable and strong economy.”
