Sentiment to hold sway

In 2019, house price movements are more likely to be dictated by buyer confidence than affordability. Uncertainty regarding what final Brexit negotiations mean for household finances is likely to result in continued buyer caution, providing little impetus for house price growth at a national level.

Regional rebalancing

Evidence suggests we have moved into the second part of the current housing cycle where the markets of the Midlands and North of England outperform those of London and the South. We expect this to be reflected in investor focus through 2019 and the next five years.

Focus on income

With the potential for house price growth limited by the prospect of increasing interest rates and mortgage regulation, we expect investors to pay closer attention to the income stream delivered by their residential investment. This is expected to be accompanied by a shift from private to corporate investment.

Boost for build to rent

By the end of Q3 2018, there were 15 institutional build to rent schemes with plans to deliver more than 1,000 homes each. We expect large-scale investors who are keen to exploit operational economies of scale to deliver more large, but increasingly diversified, offerings to the private rental market.

Pressure on planning

Measures to standardise the calculation of housing delivery targets and hold local authorities to account for the homes built in their area through the planning system are likely to gradually feed through into more planning consents in areas of high housing need.

Diversity on large sites

A slowing housing market in areas of highest housing need will mean greater diversity tenures will need to be delivered to meet housing targets. As highlighted by the Letwin Review, this could include more build to rent product and affordable housing.