Mainstream rents

Pressure on private landlords will limit the supply of rental properties (especially in the higher-value, lower-yielding markets). But the proportion of household income that tenants can afford to pay as rent will be the overriding constraint on rental growth. The fundamentals supporting rental growth, incomes and employment, are strongest in London. While a glut of buy-to-let supply in 2016 has suppressed growth recently, we predict a return to London outperforming as tax changes push landlords out of the sector.

TRANSACTIONS

We expect housing transactions to continue at around 1.2 million a year, with cash buyers continuing to account for around one-third of the market. By contrast, we expect mortgaged buy-to-let purchases to fall back further over the next five years, as tax restrictions combine with higher costs of debt to impinge on profitability. At a national level, first-time buyer numbers are expected to dip once Help to Buy ends, although we forecast mortgaged home mover numbers to increase slightly as some of those who have entered the housing market in the past five years begin to make their next step up the housing ladder.

_{Read the articles within Residential property forecasts below.}