With a lack of new speculative development, occupiers looking for space from 2006 onwards should start in the next 6-12 months. The latest set of house price data confirms our long held view that the mainstream UK housing market, rather than about to experience a steep fall, looks set for a soft landing over 2003 and 2004. Although the annual rate of growth remains at just under 20% per annum the recent monthly house price indices suggest the current underlying growth rate is closer to 10% per annum. The headline growth hides a major change of emphasis in the housing market over the last 2 years.
But more recently these very same factors have been responsible for a major slow down in the property markets in London and the South East. Growth in London over the first 6 months of 2003 was just 3% with values in the prime London market have fallen by 5% as a result of the war in Iraq and job cuts in the City.
This will limit the potential for anything other than single digit house price growth in these southern regions in the short term.
Indeed, it is turnover, rather than prices, that we expect to fall back in areas where house price growth is slowest. Higher transaction costs and the sheer cost of trading up to the next rung of the ladder means that a growing number of households are staying put.
This trend has a number of important implications but it is part of what we see as a steady move to a ‘low growth, lower turnover’ housing market.
The mainstream UK housing market is still on track for a soft landing. Whilst year on year growth is running at close to 20%,the underlying rate of recent months is closer to 10%. A clear South-North divide has emerged and we expect growth to remain strong in the north whilst stagnating in the south. Turnover rather than house prices are set to fall in the short term as a growing number of households stay put and look to add value to their property.
This is the first stages of what we see as the steady shift to a ‘low turnover, low growth’ phase for the UK housing market. Amidst the complex lawful activities, conveyancing competent will help you, on the grounds that a conveyancer’s dedication is to guarantee the avidness of the buyer particularly. Concerns over the outlook for house prices, affordability constraints and demographics are all behind the decline.