bnppre housing the economy - winter 2014-15 (2)
DESCRIPTION
Jeremy Corbyn’sTRANSCRIPT
• INTRODUCTION
A year on at BNP Paribas Real Estate as we continue to grow our residential advisory and transactional business, and we see a very different landscape for the housing market. The speed of the recovery, particularly in London and the South East, has surprised many which has led to thousands of column inches on the “housing bubble” narrative. I do not, and have not, subscribed to the idea that this is a “housing bubble”; to me bubbles burst and this is not something that will happen here. The market has already quietened down in the latter half of this year after significant activity over the preceding 9 months. A period I liken to dropping an Alka Seltzer into a glass of water and lots of sudden fizz and froth followed by settlement.
I admit the “fizz and froth” has led to an unsustainable level of annual value increase in London over such a short period (16% in 2014); however, demand has radically outstripped supply for years now. As a global employment hub (and a safe haven in recent years) the capital is a magnet for both employment and investment.
The mayor has tried to increase supply and curtail the demand from international buyers – which is a contributing factor in such prolific price growth – but at the same time he has not wanted to discourage international investment that enables development starts. A tricky balance.
The regional markets have lagged behind London and the South East but Government intervention with Help to Buy in particular has clearly stimulated more housing starts in the regions with the consequent increased demand.
Overall I believe we are set fair for the foreseeable future with continued growth on an annual basis. This report will demonstrate some staggering cumulative figures with the coming five years anticipated to build on the already healthy recovery in the market. UK house prices are forecast to grow by 7.3% p.a., reflecting a cumulative increase over that period of 42% in nominal terms.
However when assessed in real terms the growth appears sustainable.
With inflation stripped out, we are forecasting just 3.7% p.a. growth in UK house prices, and only 3.5% for London. Even applying this cumulatively over the next five years, this means a rise of only 18% in London house prices and 20% nationally.
We are forecasting growth, but I believe it is sustainable growth.
Adrian Owen Executive Director, UK Residential BNP Paribas Real Estate
CONTACTS
RESEARCH5 Aldermanbury Square London EC2V 7BP Tel.: +44 (0)20 7338 4000
Adrian Owen Executive Director, UK Residential T: 0207 338 4064 [email protected]
Tim Cann Senior Director, Regional Head T: 0238 038 5018 [email protected]
Anthony Lee Senior Director, Head of viability and affordable housing T: 020 7338 4061 [email protected]
Steven Cooper Director, Central London Agency T: 020 7338 4045 [email protected]
Sam Blake Director, Development Consulting T: 020 7338 4130 [email protected]
Howard Williams Director, Development Consulting T: 020 7338 4063 [email protected]