What a difference a year makes to house prices

5 November 2016 – by David Lindsell

The UK is set for a fall in house price growth, transaction levels and housebuilding starts, according to JLL and Savills.

Houses

Both agents have revised their forecasts significantly since last year, and agree that the age of booming house prices is over for a while, partly as a result of Brexit uncertainty. Lucian Cook, director of research at Savills, said: “It’s Brexit that has created this period of low interest rates. But it is also about stamp duty on additional homes, the prospect of mortgage regulations and a reduction in tax relief.”

Savills predicts that prices will flatline in 2017, followed by moderate increases to create 13% growth over the next five years to 2021. But that overall rise is down from the 17% that Savills predicted last year for an overlapping five-year period to 2020.

This time last year JLL was predicting a UK five-year price growth of 23% by 2020. A year on, it has dropped its estimates for the next five-year period to 2021 to just 13% – a 10 percentage point correction.

Adam Challis, head of residential research at JLL, said: “The picture is a downward movement across the board but as ever, there are regional manifestations, both leaders and laggards. The weakest markets in our view are those with stronger ties to EU trade. The North East, Wales and the South West stand out a little bit.”

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