The UK housing market is showing signs of a strong resurgence, with house prices rising at the fastest rate since November 2022, according to the latest data from Halifax, one of the country's largest mortgage lenders. The August 2024 figures reveal a robust 1.1% increase in house prices over the past month, marking the fastest monthly growth rate in nearly two years. This significant uptick indicates renewed momentum in the market after a period of uncertainty and sets the stage for a potentially bullish period ahead.
Looking further into the future, recent forecasts from leading property consultancies JLL (Jones Lang LaSalle) and Savills suggest that the UK housing market is poised for substantial growth until 2028. Both firms predict strong price increases, particularly in key regional markets, providing a compelling outlook for both homeowners and investors.
Halifax: House Prices Show Strong Monthly Growth
Halifax's latest house price index highlights a marked 1.1% increase in UK house prices in August 2024, representing the fastest growth rate since November 2022. The annual growth rate now stands at 3.3%, up from 2.6% the previous month. The rebound in house prices comes amid strong demand, tight supply, and ongoing affordability challenges, creating favourable conditions for continued price appreciation.
Kim Kinnaird, Director of Halifax Mortgages, noted that despite economic headwinds such as higher interest rates and inflationary pressures, the fundamentals of demand and supply remain robust. "There is still strong demand for housing across the country, and the limited supply of new homes continues to put upward pressure on prices," she said.
While London and the South East have seen more modest gains, regional markets like the North West, Midlands, and parts of Scotland are experiencing far stronger growth, suggesting a broader shift in the UK property market dynamics.
JLL and Savills Forecast Strong Regional Growth
In a bullish turn for the housing market, JLL and Savills have released forecasts that project substantial growth in house prices across the UK, particularly in regional markets, up until 2028. Both firms highlight strong economic fundamentals, continued urbanization, and constrained supply as key drivers of this expected growth.
JLL's Forecast: A Surge in Key Regional Cities
JLL has projected an average UK house price growth of around 9% by 2028, but the real standout figures come from their forecasts for regional cities. Birmingham, in particular, is expected to see a significant 17.5% rise in house prices over the next four years. Key drivers behind this bullish outlook include:
Robust Economic Fundamentals: Birmingham is benefiting from substantial investment in infrastructure, including the ongoing HS2 project and increased foreign investment, which is boosting employment and economic growth.
Continued Urban Migration: The city remains a hotspot for both domestic and international migration, driven by its vibrant economy, quality of life, and relative affordability compared to London.
Limited Housing Supply: Like many other UK cities, Birmingham faces a chronic shortage of new homes, which is expected to keep upward pressure on prices.
Savills' Forecast: Exceptional Growth for the West Midlands and North West
Savills is even more optimistic in its latest forecast, predicting a national average house price increase of 11% by 2028. However, some regions are set to experience significantly higher growth rates:
West Midlands: House prices in the West Midlands are forecast to rise by a substantial 23.4% by 2028. This growth is underpinned by a combination of strong economic performance, infrastructure investment, and a relative affordability advantage over London and the South East.
North West: The North West is expected to lead the way with an impressive 28.8% increase in house prices over the next four years. Cities like Manchester and Liverpool are driving this growth, benefiting from significant regeneration projects, a booming tech sector, and an influx of young professionals attracted by job opportunities and lower living costs.
These forecasts from JLL and Savills suggest a broad-based recovery in the UK housing market, with regional hotspots expected to outperform the traditionally dominant London market.
Factors Supporting a Bullish Outlook
Several factors underpin the bullish forecasts from JLL and Savills, suggesting that the UK housing market is well-positioned for sustained growth:
Economic Resilience: Despite the broader economic challenges, key regional cities are showing strong economic resilience. Cities like Birmingham, Manchester, and Liverpool are experiencing robust job growth, significant public and private sector investment, and a dynamic business environment.
Supply Constraints: The UK's chronic undersupply of housing, particularly in high-demand regions, is unlikely to be resolved in the short to medium term. This ongoing supply-demand imbalance will continue to drive house price growth.
Rising Rental Demand: With higher mortgage costs pricing some buyers out of the market, the rental sector remains buoyant. This, in turn, is encouraging buy-to-let investment, further supporting house prices.
Government Initiatives and Infrastructure Projects: Major infrastructure projects, like HS2 and regional transport upgrades, are expected to enhance connectivity and economic prospects in the Midlands and the North, boosting local property markets.
Shift in Buyer Preferences: The pandemic has accelerated changes in housing preferences, with many buyers seeking more space and a better quality of life outside London. This has driven demand in regional markets and is expected to continue shaping growth patterns.
Conclusion
The recent rise in UK house prices, coupled with bullish forecasts from JLL and Savills, suggests that the housing market is entering a period of robust growth, particularly in key regional areas. With Birmingham, the West Midlands, and the North West leading the charge, the market presents compelling opportunities for both investors and homeowners.
While challenges such as interest rates and broader economic uncertainties remain, the fundamentals of supply, demand, and regional economic strength provide a strong foundation for continued growth. For those looking to buy, sell, or invest in the UK property market, the coming years could offer significant rewards as the market continues to evolve and grow.
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