• As the housing market strengthens, we expect to see price growth ripple out of London as buyers move out of the capital in search of better value for money. This flow of wealth will result in stronger growth in Southern England, where regional price rises will outperform London over the next five years.

• The number of transactions rose by 24% in the year to February 2014. We expect to see greater levels of transactions over the next five years reaching 1.35 million by the end of 2018. While we do not expect the number of transactions to reach the long-term average of 1.6 million in the short-term, greater movement in the housing market will support demand for new homes.

• Cash purchasers, often older downsizers, will continue to play a lead role in the property market. But the number of home movers, which has remained subdued over the last couple of years, is set to pick up. First-time buyers, who made a return to the market over the last 12 months, will continue to grow in numbers.

• The extension of Help to Buy Equity Loan scheme to 2020 will continue to support the sale of new build, particularly in lower value markets where the initiative has had the greatest impact so far. The appeal of buying new build through the scheme could increase should credit conditions tighten as a result of the Mortgage Market Review.

• Following strong demand for the Government backed equity loan towards the end of last year, the rate of take up has slowed slightly. Assuming continuing rate of 2,000 HTB1 sales per month, and the current average equity loan of £40,000, the funds allocated following the recent extension of the scheme are sufficient for it to last beyond the end date of 2020.

• While the extension of Help to Buy has given the opportunity to plan ahead, the Government still needs to address how the scheme will end. Tapering remains the best option.

• The undersupply of new homes is set to remain in the foreseeable future despite an increase in building. Our best case scenario forecast for building rates falls short of the 240,000 homes needed.

• The burden of meeting the country’s growing housing requirements needs to spread among a greater variety of players, including small and medium size builders. Improving access to both funding and land for smaller companies is a vital step forward.

Taken from
Spotlight: What's Next for Residential Development?