House prices and rental values in Manchester could increase by 3.5% in 2022 after a flat 2021, but low housebuilder confidence will impact starts on site for years to come, according to JLL’s UK Residential Forecast Report.
UK house prices as a whole are expected to dip towards the end of 2021 in the face of numerous headwinds, said the real estate consultancy, before growing strongly again from 2022 onwards.
While there is currently strong growth in prices, that is expected to continue only as long as the present stamp duty holiday is in place.
In Manchester, JLL’s research shows that some areas of the city will see price falls and some areas which will see price rises as “demand for living in big cities recalibrates post-Covid”.
While JLL’s team is hopeful that the impact of Covid will lessen by the second half of next year, it expects the volume of housing transactions to remain well below the pre-pandemic anticipated level of 1.25m. In total, it predicts that 700,000 fewer transactions will take place between 2020 and 2022 than pre-pandemic forecasting suggested.
Liverpool is also expected to see pressure on prices and rents in 2021, said JLL, as increasing unemployment bites, before the market starts to grow again in 2022.
Nationally, private housing starts are expected to be well below the pre-Covid predictions of circa 200,000 starts per year. JLL predicts that it will take some time for housebuilders to become confident enough to step up their activity with around 165,000 “lost starts” between 2020 and 2024.
Nick Whitten, JLL’s head of UK living research, said: “The global pandemic has left the housing market facing some headwinds in the short term, which will put some downward pressure on house prices.
“However, it is also accelerating a new trend in which our homes are becoming the centre of our lives once again. We may be changing the way we work and the way we play, but the one certainty remains – that we need places to live – and this is something that is going to have a huge effect on the market as buyers, and renters alike, change their living requirements.”
Rental values across the UK are expected to fall by 1% in 2021 with the removal of the initial furlough scheme having a disproportionate effect on lower-middle income customer-facing workers – the majority of whom are in private rental accommodation.
However, by 2025 the firm said it expects rents to increase by 10% due to population changes, such as shrinking family size, longer life expectancy and demand for flexible, urban living space supporting the growth of renting.
JLL’s full report can be downloaded here.