Heathrow and house prices - the key link

On a week that commences with the PwC Real Estate Conference you can’t help look and think about the environment around you. I start this blog sat in London Heathrow airport waiting for a 6:20pm flight. Seeing evidence of infrastructure like Terminal 5 is inspiring to know that in the UK it does still happen, but does it happen enough? The approval of a third runway at Heathrow is a bit like marmite – you ever agree or you don’t. To me it’s key the Government have made a decision. The best way forward to actually delivering in a timely manner but also not to completely ignore other airports for growth and let us not forget the Northern Powerhouse. My experience at Manchester Airport was fair more smoother and friendlier than Heathrow!

The construction of the new runway at Heathrow will naturally be a boost for construction but also could have an adverse impact on house prices in the area – could this be a sign of things to come in the Middlesex area with increased noise – and let’s be honest a 6.5 hour night time ban will not exactly be a solution. The optimum sleep for an adult is between 7 and 8 hours so this 6.5 hour ban will not benefit anyway other than those who sleep specifically during those periods.

Although it is nice for once not to hear the soaring prices of London residential space, I do wonder at what point the blip in London prices will ripple out to the regions. The marching ever upwards of UK house prices can be argued to be creating wealth in the North but also taking it away from others who struggle to get onto the ladder. The Centre for Economics and Business Research has forecast a fall in London property prices by 5.6% in 2017 which will therefore mean growth for the UK will only be 2.6%, compared to 6.9% for 2016. 

So what does this show us – well it doesn’t show us that Brexit fears were right or wrong. It shows us that London was overheated and already heading to a cooling off period. For the rest of the UK, yes growth is slowing but generally the housing market is relatively unscathed. No surprise right! The housing crisis is not one crisis but many mini-crisis across different regions and demographics. The good sign is that the British Bankers’ Association revealed September say mortgage lending increasing (£12bn for the month – though 2% lower than September 2015) and house buyer demand, according to the National Association of Estate Agents, rose 16% in September (38,252) compared to August. People back from holidays or a general move in the right direction – either way we’ll take it.

In a circular format we see that a decision not related to housing can be linked to housing. It is an issue that needs to be explored further by the Government. They continue to promise a detailed strategy on housebuilding and this seems to be drip fed in varying strategies for different sectors – but doesn’t seem to be tackling the “affordability”. The Local Government Association is asking that councils in England be freed from restrictions on the ability to fund new home building. I think it is obvious that this will certainly aid building more homes, just look back in time – public sector delivered the houses not private.

If you any questions or would like to discuss the above please do let me know

Many thanks
Lee