UK Residential Housing Market Report. Sample

Transcription

1 UK Residential Housing Market Report

2 CONTENTS 1. Executive Summary 2. UK Economy Prospects & Key Risks Recent Trends 2 year outlook 3. Housing Market Outlook Summary House prices, supply and demand Household finances and affordability Sales activity and transactions 4. Credit Conditions Mortgage approvals Secured lending Interest rates 5. The Supply Side Housing starts and completions 6. Regional Outlook 7. Local Area forecasts 8. The Policy Side 9. The Rental Market If you like this sample forecast you can purchase the latest full version of this forecast here. Visit our website to browse our range of forecasts and services a. Prospects & Key Risks b. Prospects & Key Risks #

3 UK Housing Market: Recent Trends Forecast Summary House Prices (source data DCLG) Y-on-y % growth UK Greater London South East East of England Latest Qu Last 10 year average Next year forecast Next 5 years forecast UK house prices rose by 1.1% q-on-q in 2014q4. Demand and supply have both cooled despite brighter economic conditions. Ultra-supportive government policy being gradually unwound as economic fundamentals strengthen. South West East Midlands Forecast Highlights West Midlands Yorkshire & the Humber North West North East Wales Scotland Northern Ireland UK housing market cools in line with expectations The latest seasonally adjusted Nationwide quarterly house price index (released in early January 2015) shows that even though UK house prices continued to rise in the final quarter of 2014, the pace of increase moderated to 1.1%. December saw prices barely nudge up by 0.2%. Annual growth in 2014 was a robust 8.3%, but down from 10.5% in q3. Halifax reports a similar trend of slowing house price growth in the final quarter of the year. General activity in the market is cooling too. Bank of England data shows that the number of mortgage approvals for house purchase fell to 59,000 in November, their lowest level since June The RICS survey reports sustained weakness in new buyer enquiries which fell for the fifth consecutive month in November. The number of new instructions from landlords has also declined and anecdotal evidence from RICS members suggests that it is this lack of fresh stock that led to a marked deterioration in buyer interest. However, uncertainty around the outcome of the 2015 general election and resultant housing policy and taxation is also making buyers nervous about entering the market. Against this backdrop, it is unsurprising that house price inflation is moderating across the country despite improved economic fundamentals. Indeed, from an economic perspective, house price growth should be supported by a strong labour market, wage growth that is finally outpacing annual inflation, historically low.

4 UK Economic Prospects UK Recent Trends 2-Year Outlook Labour Market Longer-Term Outlook Inflation Interest rates Prospects & Key Risks Key trend The final estimate of 2014q3 UK GDP growth (at 0.7% q-on-q) provided further evidence that the UK economic upswing continues at a healthy pace. Expansion remains heavily reliant on consumer spending. While rebalancing the economy towards export growth remains elusive, investment growth will strengthen in the next few quarters. Meanwhile, the outlook for consumer spending has been boosted by recent data on earnings growth and inflation. This will support GDP growth of 2.4% in 2015, slowing to 2.2% in 2016 as interest rate hikes and renewed fiscal restraint take their toll. Key Trend Sterling Consumer Business Investment Government Trade Healthy gains in full-time employment and pay growth surpassing inflation will continue to ease pressure on household budgets. These outcomes are consistent with our recent upgrade to consumer spending which now shows growth at 2.5% for overall household spending in The unemployment rate stands at 6% and we expect further easing over UK y-on-y % Growth GDP Employment Credit Inflation US Dollar-Sterling rate

5 Housing Market Outlook Number of mortgage approvals Sales activity New instructions New buyer Enquiries

6 Large cities drive their region s growth UK Residential Housing Market UK Housing Market: Local Area Forecasts Highest Annual Growth (%) Region Local Last 5 years growth % Greater London Scotland South East East of England South West North West Yorkshire & the Humber East Midlands West Midlands Wales North East City of London Shetland Islands Elmbridge Cambridge Cheltenham Cheshire East York Rushcliffe Solihull Cardiff North Tyneside

7 Our economic forecasting expertise Experian's team of 20 economists is a leading provider of global, national, regional and local economic forecasts and analysis to the commercial and public sectors. Our foresight helps organisations predict the future of their markets, identify new business opportunities, quantify risk and make informed decisions. Experian Market Intelligence Group Would you like to understand how your credit portfolio compares to your peers and how it is likely to be impacted by changes in lending policy, market competition and the economy in the future? Our experts in economics, credit risk, construction, market analysis and portfolio benchmarking combine to provide an in-depth understanding of the market and economic context in which you manage your business both now and in the future. How we can help you: An independent unbiased view of the market based upon quantitative analysis of data. Benchmark your portfolio against your peers, both now and forecast into the future Provide economic forecasts specific to your sector Develop accurate business case(s) for entry into new markets Assess future market risk and predict potential economic pressures at a granular level Highlight future revenue opportunities Meet regulatory requirements for stress testing and loss forecasting Experian helping organisations understand the market, economy and future changes in household and business finances. Contact our team on: T: +44 (0) or W: Contact Rebecca Snow Managing Economist E: rebecca.snow@uk.experian.com T: +44 (0) Rebecca has been a key member of the Economics team since Rebecca contributes to the UK Regional Planning Service, which produces forecasts and analysis of detailed economic indicators for the UK and its regions, counties and local authorities. Rebecca specialises in forming a house view on the performance of the UK s key centres and produces high-quality regional and city reports. Sunita Bali Principal UK Economist E: Sunita.Bali@uk.experian.com T: +44 (0) Sunita manages the suite of Economics Forecasting Products. She joined Experian in 2008 as a senior economist and in this role produced forecasts, scenarios and analysis on the UK economy and consumers. Prior to joining Experian, she worked as a Treasury Strategist at Rabobank and an International Economist with IHS Global Insight. where she held various roles related to modelling and forecasting global macro, industries and energy markets.

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