Strutt & Parker looks at the res­i­den­tial prop­erty mar­ket in 2018.

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The res­i­den­tial prop­erty mar­ket in 2017 was char­ac­terised by a strik­ing dif­fer­ence in house price growth be­tween the UK and London. Ac­cord­ing to Na­tion­wide, UK house prices grew 2.5% in 2017. In con­trast, Prime Cen­tral London (PCL) prices fell around 3%. The na­tional pic­ture was driven by strong growth out­side London, with the East Mid­lands, South West and West Mid­lands all ex­pe­ri­enc­ing over 4.5% growth.

2018 looks set to con­tinue the trend of steady, al­beit un­spec­tac­u­lar UK house price growth of around 2.5%, while prices are fore­cast to be flat in PCL, with a down­side risk of 5%.

Stephanie Mcma­hon, Head of Re­search at Strutt & Parker said, “The five-year fore­casts re­main dif­fi­cult to pre­dict, as so much rests on the out­come of Brexit ne­go­ti­a­tions and the at­trac­tive­ness of the UK as a place to live, study, work, do busi­ness and in­vest in.

Tra­di­tion­ally the most buoy­ant hous­ing mar­ket in the UK, London ex­pe­ri­enced a slow­down fol­low­ing the EU Ref­er­en­dum, and this may con­tinue un­til 2020. Re­gional hotspots are likely to be the driv­ers of UK house price growth in the mean­time, with 18% growth fore­cast for the UK over 5 years to 2022.

Ne­ces­sity breeds in­ven­tion, and in a slower mar­ket more in­no­va­tive hous­ing so­lu­tions may come to the fore. This would in­clude more off­site con­struc­tion and mod­u­lar build­ings to speed up de­liv­ery, and max­imis­ing liv­ing space through in­creased den­sity on a plot of land. This can be viewed in tan­dem with res­i­den­tial trends which are sup­ported by in­no­va­tive de­sign and ethos, in­clud­ing Mi­cro Man­sions and Yoyo homes, which al­low for chang­ing liv­ing pat­terns through flex­i­ble in­ter­nal spa­ces.”

De­liv­ery of new hous­ing in the UK was given a boost in the Bud­get in Novem­ber 2017, and the Gov­ern­ment re­it­er­ated its com­mit­ment to the Cam­bridge-mil­ton Keynes-ox­ford growth cor­ri­dor. The East West rail link and Ox­ford Cam­bridge Ex­press­way will re­con­nect the two his­toric univer­sity ci­ties and help sup­port the de­liv­ery of one mil­lion new homes by 2050.

Paul Sut­ton from Strutt & Parker’s De­vel­op­ment & Plan­ning team com­mented: “House prices in both Cam­bridge and Ox­ford have been driven by high de­mand and low sup­ply, built around the pop­u­lar­ity of our world class uni­ver­si­ties. More high-tech in­dus­try will need a lot more hous­ing, and in­creas­ing sup­ply in the bor­der­ing com­muter towns and vil­lages works to­wards the greater goal of de­liv­er­ing ‘Eng­land’s Sil­i­con Val­ley’.”

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