New numbers suggest that the UK residential property market will thrive next year. Sahel Majali examines these figures to determine how developers can source new opportunities in the UK’s residential property sector as we move into 2016.
Booming UK residential property market
The UK’s residential property market recorded impressive growth rates for 2015. Data from UK-based online real estate portal Rightmove shows that it currently takes 66 days, on average, to sell a residential property down from 69 days recorded in October of last year. The portal’s latest house price index shows that UK residential property values expanded 6.2% year-on-year to November 2015.
Smallest seasonal dip
However UK house prices decreased by 1.3% throughout November. House prices tend to dip towards Christmas, according to Miles Shipside, director and housing market analyst at Rightmove. He was quoted by the Daily Mail saying: “those looking to market their property as Christmas gets closer often have a greater sense of urgency to find a buyer and sensibly recognise that trimming their asking price will provide an incentive to potential buyers more focused on seasonal Christmas trimmings.”
But this year’s seasonal dip was the smallest since 2011. Data suggests that average UK residential property values decreased 3% in 2012, then 1.4% in 2013, and went down by 1.9% last year. According to Select Property, the report suggested that this could be indicative of higher prices next year.
Buoyant market conditions
Shipside added: “Buoyant market conditions and a confident outlook for 2016 mean that the reduction, while no-doubt welcome to hard-pressed buyers, is the most Scrooge-like since 2011. It’s likely to be a short-lived respite as the combination of high confidence and low interest rates is a recipe for higher prices next year. Long term low interest rates are typically a trigger for activity and price rises in the property market while other parts of the economy are less susceptible to such an incentive.”
The report explained that housing demand will continue to outstrip supply in 2016, which will push house prices up in different regions across the UK. Figures from the Local Government Association show that the UK needs to build 230,000 new homes per annum, and with private developers only contributing around 150,000 residential units per year, this has left local councils struggling to account for the shortfall.
Mid Contracting UK
The country’s supply of residential property is so weak that sellers felt no need to lower asking prices in November 2015, despite traditional market trends. This is because demand for UK residential property is continuing to expand, and this is unlikely to change in 2016. This suggests that it’s a good time for developers to enter the UK’s residential property sector. Climbing asking prices should provide them with a range of opportunities to secure attractive return on investment.
Mid Contracting UK has extensive experience across the country’s construction industry. We have delivered a wide range of projects, including the Aynhoe Park Estate residential development in Aynho, Oxfordshire. We have the skilled professionals, industry expertise and sector connections developers need to take advantage of the opportunities the UK’s residential property market will present in 2016.