Housing sector to remain strong and active despite Brexit but long-term supply a major concern which needs to be addressed by policymakers, predicts JLL in latest market forecast
Although Brexit will dominate UK housing markets over the short to medium term, the sector looks set to remain reasonably strong and active despite the associated uncertainty and a slower economy.
That’s according to JLL’s latest market forecast, which predicts that Scotland’s house prices will remain flat next year, with 1% growth in 2018.
The global firm, which specialises is both commercial and residential property, says house price growth in Scotland is predicted to rise to 4.5% per annum by 2021 as greater certainty returns to the UK following Brexit.
UK transaction levels are forecast to decline from around £1.22 million this year to £1.08 million next year in an 11% fall as uncertainty causes some households to defer house purchase decisions. However, JLL predicts that the softer market conditions will encourage more first-time buyers to get onto the housing ladder, especially as interest rates will be so enticing.
Jason Hogg, director residential at JLL in Edinburgh, said: “Somewhat against the grain, house builders in Scotland have enjoyed a reasonable, immediate post-Brexit sales environment benefitting from the Scottish Government’s Help to Buy Scheme and record low interest rates. Enquiries for new development opportunities to meet housing demand in the short to medium term remains strong. However, we acknowledge that economic uncertainty associated with whatever Brexit we end up with is harder to model on larger sites.
“What has been particularly encouraging is to see how certain housing markets within Scotland, particularly Edinburgh City Centre, have seen strong price growth and increased levels of demand on new build housing stock.”
But JLL says it’s concerned about the impact that Brexit will have on housing supply, both in Scotland and across the UK.
The firm says it welcomes fresh and new rhetoric from policymakers, but believes that it will be very difficult to even maintain current levels of house building given underlying conditions.
Hogg added: “Put simply, there are not enough homes being built in Scotland to satisfy demand. We know that the Scottish Government is actively seeking answers and it will be interesting to see whether policy initiatives target short-term supply improvements or look beyond the immediate horizon to create lasting, long-term solutions.
“Given the likely Brexit uncertainty over the next few years we believe that policymakers will be wisest to look long-term.”