UK house prices to grow by 13.1% over the next five years, according to latest outlook report
House price growth in the UK is expected to be relatively moderate at 1.8% in 2019 with the property market affected by a number of economic, political and financial trends, according to the latest outlook report.
The outlook is influenced by lower sales volume and capital growth, growing caution amongst lenders, and dampened investor demand for buy to let, says the real estate market outlook report from global real estate advisor CBRE.
It also says that Help to Buy (HTB) continues to underpin the new build market, although the volume of HTB sales will fall after 2021 when only first time buyers will be eligible while affordability and mortgage regulation will constrain price growth.
It also points out that house prices are approaching the limit that current incomes and credit conditions can support, and the ability for buyers to bid up prices is limited, but nevertheless will see steady growth of a cumulative 13.1% over the next five years.
The forecast also says that rents are set to rise over the next five years, and demand for rental homes will increase after a two year period of weakening tenant enquiries, particularly from lower earning younger people.
It adds that a significant volume of institutional capital is targeting the UK’s private rented sector (PRS) with £2.1 billion invested in the year to the third quarter of 2018, some 51% higher than the same period of 2017.
Investment is on a firm upwards trajectory, and investment volumes in 2019 seem likely to exceed 2018’s total, it concludes.
A breakdown of the forecast figures shows that the firm expects house prices to increase by 1.8% in 2019, by 2.3% in 2020, by 3.4% in 2021, by 3.7% in 2022 and then just 1.3% in 2023, but this amounts to a cumulative 13.1% over the next five years.
In the lettings market it forecasts a rise of 1.3% in 2019, 1.9% in 2020, 2.5% in 2021, 2.7% in 2022 and 2.6% in 2023, a cumulative 11.4%.