PwC Report Predicts Continued Property Price Growth
PwCs’ UK Economic Outlook report published today predicts that house price inflation driven by decades of undersupply will continue. They commented that in recent years prices have grown fastest in the outer boroughs of London and London’s commuter belt cities.
As a result, their projections suggest that the East and Southern regions of England will continue to outperform house price growth in London. They conclude that these regional effects will be the primary driver sustaining UK house price growth over the next few years.
In detail their summary was:
UK house price growth was not affected by the Brexit vote as quickly as expected, but headwinds have been evident towards the end of 2016 and during the first months of this year. We anticipate that house price inflation will be more modest going forward. However, in our main scenario, the house price-to earnings ratio will continue to grow and even achieving 250,000 new homes per year is unlikely to provide a quick fix for this affordability problem given many decades of undersupply.
London has seen a slowdown in its housing market over the past two years, particularly within the prime central boroughs, linked to severe affordability concerns, stamp duty changes and probably also the greater extent to which economic and political uncertainty impacts the prime central London market. House prices in the UK have grown fastest in the past 2-3 years in the outer boroughs of London and cities located in London’s commuter belt.
Our model indicates that the East and Southern regions of England will continue to outperform house price growth in London and be the prime engine of UK house price growth over the next few years. By contrast, Northern Ireland and some parts of Northern England and Scotland still have average house prices below their pre-crisis 2007 peaks.”