And yet there is plenty we do know, or can predict with confidence, that allows us to best estimate the future of the housing market. In particular, there are six key factors (below) that influence our forecasts.
They show how the UK housing market has many moving parts. How we occupy our property changes over time and between generations. That means house prices, which we consider at a regional and national level in House price outlook, are just part of the picture. Transaction levels can be as much of a variable, whether across the market or among different groups of buyers, as we explore in Changing fortunes for buyers.
Our thoughts on what these six factors mean for the market are laid bare throughout this edition of Residential Property Forecasts.
1
In the short term, there will be uncertainty over what Brexit means for the UK economy and, just as importantly, for individual households’ wealth and financial security. While it will take time for the precise impact to become clear, this uncertainty will make buyers more cautious in the short term at least.
2
Mortgage interest rates in the UK are likely to rise over the next five years. That is likely to put a squeeze on the amount people can borrow in an age of mortgage regulation. Dramatic increases in the cost of borrowing, that would create undue financial stress on households, are unlikely.
3
Buy-to-let investors are now beginning to feel the effect of the mortgage regulations that owner-occupiers have lived with since 2014. They also now bear greater stamp duty costs and, unless there is a change of political heart, will increasingly be affected by restrictions on income tax relief.
4
London has shown much greater house price growth than the rest of the country for the majority of the past decade. So, it is likely to be more constrained than the rest of the country by the factors above.
5
In previous cycles, we have always reached a point where house price growth in the north of the country exceeds that in the south. In the past, it was facilitated by a strong economy or relatively unrestricted access to mortgages.
6
We are not building enough homes of the right type in the right places to meet demand. However, there seems to be an increased political desire to address this.
