Real estate analyst Richard Donnell from Zoopla considers a three-bedroom property in that specific location his top investment recommendation.
Richard Donnell, executive director at Zoopla, has provided insights into the current and future trends of the UK housing market. With over 30 years of experience in the property industry, Donnell's expertise offers valuable perspectives on both the short-term and long-term house price trends.
Next 12 Months
Donnell predicts house price growth will be around 1% by the end of 2025. This is a downward revision from earlier forecasts of 2%, primarily due to higher-than-expected mortgage rates and increased supply of homes on the market.
Despite slower price growth, the UK housing market is experiencing a surge in activity, with more buyers entering the market. However, rising stamp duty costs and a greater supply of homes are contributing to a buyer's market, which is keeping price rises in check.
Next 10 Years
Looking ahead to the next decade, Donnell expects house prices to grow at a rate of 2–3% annually. This pace is roughly aligned with income growth, reflecting a new normal in affordability.
Changes to mortgage stress-test rules have increased borrowing capacity, allowing buyers to borrow up to 20% more than previously possible without changes in income or mortgage rates. This could support more consistent price growth over the long term.
The Landlord Sector
The landlord sector has become more professionalized, with over 2 million private landlords owning property in the UK, providing much-needed rented housing. A significant number of rented homes are owned by landlords with more than five properties. Today's landlords prioritize cash flow and rental income over capital gains.
Donnell suggests that first-time buyers should be buying with a 10-12 year time horizon. He recommends buying a home that is cost-effective to make an Energy Performance Certificate B or C.
Investment Opportunities
For those considering investment, Donnell suggests investing in a three-bed house that needs refurbishment in a town near Manchester. He also suggests considering leasehold flats in London for investment, but with caution.
Richard Donnell heads up the research team at Zoopla, looking into the most important trends across the housing market. His insights offer a comprehensive view of the current state and future direction of the UK housing market.
[1] Zoopla Research, 2022 [2] Office for National Statistics, 2022 [3] HM Revenue & Customs, 2022
- With his expertise in finance, Richard Donnell advises first-time buyers to approach home-buying with a 10-12 year time horizon, aiming for cost-effective properties that can be improved to achieve an Energy Performance Certificate B or C.
- In the future, retirees may find investment opportunities in pension and insurance products, which could be used to purchase property and generate supplementary income during retirement, influencing the overall lifestyle trends.
- Given the surge in sports popularity, the increasing popularity of team sports and fitness activities among people of all age groups could create demand for properties located near sports facilities, potentially opening up new real estate investment opportunities.
