JLL: Impact of job losses yet to hit NW housing market
House price falls will continue to be slightly greater in the South of England compared to Midland and Northern areas, with 2009 forecasts standing at -17.7% and -15.7% respectively, according to the latest residential research from Jones Lang LaSalle.
However, Jones Lang LaSalle expects the increasing burden of higher unemployment and deferred house price falls from 2009 to lead to greater house price declines in Midland and Northern regions during 2010.
Southern areas are forecasted to see average house price falls of 1-3% by the end of 2010 while Midland and Northern areas will experience declines of 2-4%.
Ian Thomlinson, head of Jones Lang LaSalle's residential investment and development team in Manchester, commented: "It is important to remember that the talked-about 'green shoots of recovery' are still very green. The UK economy is still in dire straits and it is unlikely that the full impact of declining employment has yet to hit the housing market. The key obstacle to recovery will be significantly higher unemployment and the implications this has for repossessions and household finances."
He continued: "Despite these current woes we believe the medium and longer term prospects for the UK housing market remain positive and, come 2010, we fully expect the worst of the house price falls and housing market confidence to be behind us."
Jones Lang LaSalle predicts that London will lead the housing market recovery seeing positive house price growth in the autumn of 2010, and will experience the strongest house price recovery during 2011-2012, in part due to the boost the capital will get from hosting the 2012 Olympic Games. The Midland and Northern regions however will be slower to recover. By 2010 it is expected that average UK house prices will be 28% below their 2007 peak and this will encourage new demand, and first-time buyer demand in particular, with both being supported by a more stable and generous mortgage market compared to now. Overall, UK residential price growth is calculated to be 4-6% during 2011 increasing to around 9% during 2012-2013.
Thomlinson concluded: "Some residential developers have begun to move back into the development land market, albeit cautiously, and we anticipate demand will continue to improve for better quality site opportunities as the year progresses.
"It is common knowledge that we are not building sufficient numbers of homes in the UK to satisfy the projected nine million increase in the UK population over the next 25 years. As a result, UK house prices are predicted to rise on average in the order of 5-7% per year during this time."
