Spring Statement 2019: Five charts on housing
Often some of the most interesting data released alongside the Budget or Spring Statement can be found in the policy costings and economic forecasts issued by the Office for Budget Responsibility (OBR).
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Among other things, they give a good guide as to the Government’s views on the future direction of the UK housing market. We have outlined the highlights below.
Property prices
The OBR is forecasting house price growth across the UK of 14.9% between 2019 and 2023. Growth of 0.8% is expected in 2019 as a whole, a notable revision from the previous forecast issued in October 2018, before rising to 1.3% in 2020 and 3.7% in 2021. In 2022 to 2024 annual growth of 4.1% and 4.2% is forecast.
Download Knight Frank’s Housing Market Forecasts here.
Property transactions
The OBR is forecasting market activity will remain fairly subdued in the short-to-medium term. The total number of property sales across the UK in 2019 is expected to reach 1.17m, around 2% less than the 1.19m recorded in 2018.
Over the longer-term, the OBR is forecasting that market activity will pick up - albeit only to 1.35m transactions by the end of 2023, well below pre-crash peaks in 2006 and 2007 when around 1.6m transactions were reported annually.
More information on housing market activity can be found in the UK Residential Market Update here.
Stamp Duty
No changes were announced to SDLT rates in the Spring Statement. Despite this, the OBR made a number of revisions to its previous forecasts for tax receipts from residential property.
This is likely to reflect the recent slowdown in housing transactions, as well as strong activity among first-time buyers, the majority of whom qualify for tax relief. SDLT from residential properties is forecast to raise £8.5 billion in 2018-19, up from £8.2 billion.
In 2019-20, forecast revenue is £8.3 billion, down from £8.7 billion. By 2023-24 revenue is expected to have climbed to £11.7 billion, slightly down on the £11.8 billion forecast in October.
For more detail on the impact of stamp duty on prime markets read our latest Prime London and Prime Country reports
Housing starts and completions
New private housebuilding starts and completions have been steadily rising for the past few years and are comfortably higher than their post-crisis lows. The OBR figures suggest that in 2018 there were 173,327 private housebuilding starts and 160,454 completions. These figures are expected to fall slightly over the coming five years, as shown in the chart below.
Download our Residential Development Land Index for the latest news on housebuilding here.
Net additions
The number of net additional properties added to the UK housing stock – a figure which take into account new housebuilding, conversions, change of use, and demolitions – is expected to peak at 285,400 in 2019, before dropping back to 252,000 by 2023. The figures suggest that new housing delivery will remain below the 300,000 target set by the government over the forecast period.
Download our Housebuilding Report for housebuilders’ views on delivery here.