Residential property prices in the UK are expected to remain largely flat until the Brexit negotiations are concluded in 2019, according to JLL.
Fresh research from the property group suggests that the housing market across the UK will be “more subdued” over the next few years, with home prices not set to recover until 2020 at the earliest, and that is “assuming Brexit negotiations are not too detrimental”.
Reassuring for many property investors, JLL is not forecasting any major house price corrections, despite uncertainty around Brexit, with the company forecasting that prices across the UK will rise by 0.5% in 2017 and 1% in 2018, before increasing by 2% in 2019 and 4% in 2020.
JLL believe that any dramatic falls in home prices will be cushioned by the ongoing supply-demand imbalance in the market, which could yet widen further on the back of a potential fall in construction levels, especially in London.
The number of new homes currently being built remains significantly below the government’s target of 200,000 new homes a year, and is almost half the estimated 300,000 new homes a year needed just to meet existing demand for housing in this country, according to a new report from the House of Lords Economic Affairs Committee.
And yet, rather than increasing new housing supply over the next few years, Neil Chegwidden, director of JLL residential research, believes that the volume of new build homes coming on to the market will drop to around 134,000 units next year, which will start to place upward pressure on house prices once demand from buyers picks up again – possibly from 2018 onwards.
Chegwidden said: “Of deeper concern is that housebuilder activity could pull back from current rates of construction.
“Although levels of new housing delivery were still woefully low prior to the referendum at least the direction of travel was positive and encouraging. This will now fall back again.”