London, 30th November 2009
– London and the South East have led a strong recovery for UK house prices during the past six to eight months and average house price growth for 2009 could reach 5% by the year end. However, according to Jones Lang LaSalle’s end of year UK Residential Market Forecast
, there are already signs of this growth slowing which will continue into next year with average house prices across the UK expected to fall by 7% in 2010.
During 2010 unemployment is expected to continue rising, and other factors such as the rise in VAT in January, the general election, the diminishing impact of the quantitative easing programme and further government fiscal tightening will all weaken the demand for housing over the next 12-18 months while also forcing more homes into the marketplace.
, Head of Residential Development and Investment
at Jones Lang LaSalle, said: “Whilst there is evidence to suggest the UK economy is in recovery mode there remain question marks about the depth and sustainability as well as how the public finances can be repaired, quite possibly under a new government. The recent pick up in house prices is based on fragile economic fundamentals such as a weak pound, which has driven overseas buyer demand, and a boost from the stock market recovery, both of which are unlikely to be as supportive during 2010. It is very probable the present recovery will stall next year with prices falling by 7% as the rate in the increase of new buyers to the market eases, while the low number of properties on the market bottoms out and starts to rise again.”
Thomas concluded: “The overhang from 2010 is expected to make 2011 a difficult year but thereafter we can expect the potential for strong house price growth of 6% per annum as an improving economy forces increased housing demand to come face to face with restricted supply.”