In line with our expectations at the start of the year, the UK housing market saw modest, yet stable growth in Q2. London however performed much better than expected, even if the amount of property on estate agents’ books remained at close to historic lows. We have also seen a general lack of properties available to rent, which has underpinned rental returns.
While much has been made in the press of the drop in property prices in London, very little has been said about the fundamental lack of stock, which will continue to underpin the housing market. While house builders report that they are running at maximum capacity, more than 86% say they will be unable to meet the government’s required target of 300,000 new homes each year by 2022.
This chronic lack of supply along with the strength of the jobs market and continued low interest rates will continue to support the housing market and provide impetus for growth.