3. London house price growth by borough
-10%
-5%
0%
5%
10%
15%
20%
-10%
-5%
0%
5%
10%
15%
20%
Annualgrowth
2016 2017
Source: Savills repeat sales index
4. Mortgage constraints in London
First Time
Buyers
£65,800
Household
Income
4.09
Loan to
Income
£96,000
Deposit
Home
Movers
£89,000
Household
Income
4.09
Loan to
Income
Buy to Let
Investors
-44%
fall in BTL
purchases
since 2014
4.56%
Average
gross yield
(UK 5.56%)
-58%
fall in
purchases
since 2007
Source: UK Finance Q4 2017
5. Mainstream London Forecasts
2016 2017 2018 2019 2020 2021 2022
5 years to
2022
Capital Values
+3.6% -0.5% -2.0% 0.0% +5.0% +2.0% +2.0%
+7%
Rental Values
+5.0% -3.0% +3.0% +3.0% +3.5% +3.5% +3.0%
+17%
N.B. These forecasts apply to average prices in the second hand market. New Build values may not move at the same rate.
Source: Savills Research, Nationwide, Rightmove
7. HELP TO BUY
Challenges
Potentially more targeted at
those on lower
incomes/FTBs?
Drivers
Strong pipeline of eligible
mainstream homes
More developers adopting
HTB
MORTGAGED
DOMESTIC INVESTOR
Challenges
SDLT
Reduced tax relief
Mortgage regulation
Drivers
Strong rental demand
OVERSEAS INVESTOR
Challenges
SDLT and other taxes
Currency window closing
Chinese capital restrictions
Drivers
Long term fundamentals
remain
LARGE SCALE
PRS
Challenges
Viability
Affordable housing
requirements
Drivers
Strong pipeline of BTR
permissions
Allows developers to de-risk
MORTGAGED OWNER
OCCUPIER
Challenges
Deposit affordability
Mortgage regulation
Rate rises looming
Drivers
Bank of Mum & Dad
Rising appeal of new over
second hand
Stable demand
(at 2017 levels)
Continued
government support
and take up
Biggest fall as most
constraints
Stable demand –
fundamentals
remain
Continued growth of
sector
9. ↓=6↓ East Midlands 14.8% 32.4%
↓=6↓ West Midlands 14.8% 28.4%
↓8↓ South West 14.2% 31.9%
Next 5 years Last 5 years
↑1↑ North West 18.1% 23.8%
↑=2↑ North East 17.6% 10.2%
↑=2↑ Y & H 17.6% 21.7%
↑4↑ Scotland 17.0% 15.2%
↑5↑ Wales 15.9% 19.3%
↓=9↓ East 11.5% 48.3%
↓=9↓ South East 11.5% 42.0%
↓11↓ London 7.1% 56.8%
Source: ONS (to Sept 2017)
Savills
Guardian (Halifax)
Mail (Hometrack)
CityAM (YouGov)
To Dec 2017, using Land Registry, 6 month smoothed
Nationwide started recording ANNUAL price falls in Q3. Annual as at Q4 is 0.5%
Savills repeat sales index shows still in slight positive territory at 1.7%.
Rental market has sufferAssumptions
Base rate, mortgage rate, GDP recovery
ed in 2017 fro new supply following SDLT changes in 2016 – renewals have come in all at once, plus more new build stock. Mid-2017 we started to see investors rationalise their portfolios.
Consequences are weak capital price growth – the development industry will be more reliant on HTB and PRS/BTR
Hitting up against mortgage regulation…
What does this mean in terms of price growth across the wider London market?
EPC E or higher to let out a property – plan is to raise over next few years
Luciano Pia,
25 Verde, Turin
Resilience and sustainability
Green development has a social value but also follows what homebuyers are looking for
By 2025, demand for water in London will be 10% greater than supply – integrating water catching into design becomes a USP
Heating/cooling - > lower running costs
NHBC survey -> energy efficiency a key concern for buyers of newbuild
According to the GLA Intelligence Unit, London will have 100,000 more octogenarians by 2029
