PwC’s latest UK Economic Outlook projects the North West will see house price growth of 3.7% in 2017, in line with the forecast UK average.
The average residential property in the North West could be worth approximately £153,000 in 2017, £6,000 higher than in 2016, and could rise to over £172,000 by 2025.
In contrast the London property market, which has been most severely impacted by economic and policy uncertainty and the recent changes to stamp duty, will continue to slow, with only 2.8% and 3.8% growth on average in 2017 and 2018 respectively.
Elsewhere in the UK, the East and Southern regions of England will continue to grow above the UK average, but Northern Ireland and the North East will continue to lag behind. While the average house price across the UK has grown by 17% since mid-2007, over a quarter of all local authorities are still below the 2007 peak.
Iwan Griffiths, PwC’s North West regional chairman, commented:
“The buoyant housing market reflects the strength of the North West economy as a key growth area in the UK. We are seeing the region fast become a destination of choice for many businesses which is having a positive impact on the economic growth of the region and regional housing markets.
“Whilst strong house prices are good news for many, we must continue to build much-needed homes across a range of housing tenures to make sure the market remains open to those who are not yet on the housing ladder.”
Brexit uncertainty starts to bite on UK GDP
PwC’s forecast projects GVA growth in the North West will grow by around 1.4% in 2017, slowing to 1.2% in 2018.
UK GDP growth will slow from 1.8% in 2016, to around 1.5% in 2017 and 1.4% in 2018, according to the latest projections from PwC. This is due to slower consumer spending growth and the drag on business investment due to ongoing political and economic uncertainty relating to the outcome of the Brexit negotiations.
While UK economic growth held up better than expected in the six months following the Brexit vote, growth slowed in the first half of 2017 as inflation rose sharply, squeezing household spending power.
PwC expects consumer spending growth to continue to moderate in 2017-18 as inflation eats into real spending power and wage growth remains subdued despite record employment rates. So far, consumers have offset this in part through higher borrowing, but there are limits to how much further this can go as household savings ratios have already fallen to very low levels. On the other hand, the weak pound should also have some offsetting benefits for net exports as will a stronger global economy.
Iwan Griffiths concluded:
“Listening to many of our clients we know there is an air of uncertainty around our post-Brexit future. However, many are continuing to explore how we can maximise the North West’s economic and industrial strengths as we prepare to leave the EU.”