Previous research shows that despite Brexit, the UK’s housing market remained strong in June 2016. A new study from CBRE, a leading commercial property adviser, indicates that sturdy economic fundamentals will support British house price growth throughout 2016.
Encouraging price growth
Property Wire writes that CBRE sees current British house value growth of 5.1% as encouraging. The commercial property adviser added that UK residential property prices should expand by an average of 3% in 2016. In the second quarter of 2016, house price growth was strongest in the Outer Metropolitan area (12.4%) and London (9.9%), but weakest in the North (1%), year-on-year.
CBRE argued that British house price growth should remain robust, due to strong economic fundamentals. Yes, the firm conceded, there is still uncertainty in the market. However employment is high, borrowing costs are low and a weaker Pound could grow exports. These advantageous factors, CBRE suggested, will help UK house prices expand, despite cautious buyer sentiment.
Commenting, CBRE Head of Research Jennet Siebrits said: “Despite some short term turmoil following the referendum, the UK still has otherwise very stable economic foundations. While the recovery in 2013 was largely driven by consumer spending, there are now encouraging signs of growth becoming more broad based and coming from multiple sectors.”
Going further, she noted: “London and the UK are still robust investment regions with a strong and established legal structure, favourable time zone, world class education system, and a durable, settled, democratic political structure… Our current forecasts remain broadly unchanged and we expect UK house prices to grow by an average of 3% this year.”
In the report, CBRE also broke its findings down by region. The firm suggested that activity in the capital should remain high, due to its acute housing supply and demand ratio, despite cautious sentiment. Meanwhile the South-East, CBRE argued, saw its residential land market continue to rack up robust growth in the second three months of 2016. This, CBRE indicated, was facilitated by a rising number of successful office conversion schemes and Permitted Development Right opportunities.
The private rented sector continues to dominate city markets, CBRE said, while house price and rental growth in the South-West of England is still being driven by an imbalanced supply and demand ratio. Furthermore in the North of England, house prices have continued to benefit from Whitehall’s ‘Help to Buy’ schemes – which have introduced more buyers into the market, over the last two quarters.
Turning to Scotland, we see that its sub-£500,000 residential property sector continued to post strong performances in 2016. Meanwhile, the upper end of Scotland’s housing market continues to benefit from LBTT rates. Also due to an acute lack of supply, Scotland’s land sector has seen rising values during 2016, especially in prime regions such as East Lothian and Edinburgh.
Robust national economy
With this report, CBRE has confirmed that the British housing market is going strong. The UK boasts a robust national economy, with the falling value of the pound potentially even boosting exports post-Brexit. Coupled with high investor interest and an acute lack of housing across many parts of the country, it is clear that this could maintain UK residential real estate sector expansion in 2016.