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The Future for Housing in the UK

The Future for Housing in the UK

6th January 2015

The RICS held a London Residential Property Market Forum last month. The event included an economic and market update from Simon Rubinsohn, Chief Economist at RICS, who reported on key trends which may affect the UK housing market in 2015.

Among other things, Rubinsohn spoke about the Bank of England's view that inflation will not rise significantly this year despite the expectation that wages will finally begin to edge upwards. He highlighted key concerns including political uncertainty in the run up to the election, a weak Chinese economy and the danger of the Euro area slipping into outright deflation.

He also spoke of positive factors which may affect the UK housing market this year, such as a prolonged period of low oil prices and the possibility of quantitative easing from the European Central Bank which could support a stronger outturn for the economy.

More specifically, on the housing front, the RICS 2015 UK Housing Market Forecast anticipates UK house prices increasing by 3% and rent increasing by 2% during the course of the year but warns that no price rises are expected in London (0%). The medium term (5 year) view from the respected RICS thought leader was largely upbeat, reflecting in part the support for prices provided by the structural shortfall in supply. (The presumption is that around 230,000 new homes are needed each year).

Rubinsohn’s economic update was followed by a debate led by former Mayor of London Ken Livingstone and Bob Neill MP about housing in London. There was a general consensus that housing is a key social and economic risk facing the capital city and a need to redefine what “affordable housing” means since housing in many areas of the city is now inaccessible even for those earning as much as £80k per year. An increasing number of people are now choosing to live outside London and commute from towns such as Ashford, Sevenoaks and Maidstone.

There was broad agreement that more could be done to depoliticise infrastructure and housing delivery through housing delivery units with appropriate powers and the need for greater empowerment of local authorities was discussed. Event delegates said they would be happy to help fund a new generation of planning officers to help speed up the currently slow process.

Other topics raised included the private rented sector (including the recently published RICS code of conduct), the impact of the proposed 'mansion tax' for London and the need for local authorities to provide more local solutions.

To find out more about the UK housing market and our predictions for 2015 at a more local level, contact SP Residential on 01622 692206 or email enquiries@sp-residential.co.uk