Housing Market OverviewLucian Cook

Head of UK Residential Research, Savills

@LucianCook

Current Position

UK House Price Growth

Dec-05

Jun-0

6

Dec-06

Jun-0

7

Dec-07

Jun-0

8

Dec-08

Jun-0

9

Dec-09

Jun-1

0

Dec-10

Jun-1

1

Dec-11

Jun-1

2

Dec-12

Jun-1

3

Dec-13

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

Land Registry Halifax Nationwide

An

nu

al H

ou

se

Pri

ce

Gro

wth

Nationwide

+9.4%

Halifax+7.9%

Land Registry+4.2%

Heavily driven by London

Source: Nationwide, Regional Quarterly Index

11.7%Since

June 2005

7.0%Annual

15.2% SinceMarch 2009

18.2%Since

June 2005

3.6% Annual

2.6% Since March 2009

14.9%Annual

43.5%Since

June 2005

41.0% SinceMarch 2009

Prime Markets

Q on Q Y on Y Since 2007 Peak

London 2.9% 11.4% 30.6%

Suburbs 1.6% 4.7% 2.9%

Inner Commute 1.5% 4.7% 0.5%

Outer Commute 1.8% 5.3% -2.9%

Remainder of South 2.2% 3.1% -12.9%

Midlands and North 0.1% -0.1% -16.9%

Scotland 1.1% -2.3% -23.0%

A resurgence in demand

Transactions

+31%3 months to

end Jan

Mortgage Completions

+20%Q4 2013

Transactions

+26%Q4 2013

Mortgage Completions

+19%Q4 2013

Transactions

+30%3 months to

end Jan

Transactions

+25%Q4 2013

Mortgage Completions

+20%Q4 2013

Transactions

+30%3 months to

end Jan

Transactions

+25%Q4 2013

Mortgage Completions

+20%Q4 2013

Source: HMRC, CML

Understanding the shape of the market

FTB Mortgages Home Mover Mortgages BTL Mortgages Cash Transactions -

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

Average 1993 - 2002 Average 2003 - 2007 2012 2013

Source: HMRC, CML, Savills

Locally speaking

Source: Registers of Scotland

Aberdeensh

ire

Mid

loth

ian

Mora

y

Angus

Highla

nd

Dumfri

es & G

'way

Scottis

h Bord

ers

Dundee

Perth &

Kin

ross

Inve

rclyd

e

W D

unbartonsh

ire

S Lanark

shire

E Ayr

shire

N Lanark

shire

W L

othia

n30%

40%

50%

60%

70%

80%

90%

-

40,000

80,000

120,000

160,000

200,000

240,000

Transactions v Pre Crunch Average House Price

Looking Forward

Political issues

Avoiding Boom & Bust

Housing Delivery

Help to Buy

Taxation

Independence

Affordability issues

0%

20%

40%

60%

80%

100%

120%

FTB deposit as a % of Income

Source: Savills / CML

Q4 1983Q1 1989Q2 1994Q3 1999Q4 2004Q1 20105%

10%

15%

20%

25%

30%

FTB Interest as a % of IncomeFTB Total Repayments as a % of Income

UK Housing Market Outlook

0%

H

ouse

pric

e gr

owth

40

%

3.5% Mortgage Rates 7.0%

FORECASTEarnings led

price growth with gradual recovery

in transaction levels

BUBBLESignificant issues

of deposit & mortgage

affordability - leading to price falls at end of

period

PRICESTAGNATION

Erosion of mortgage

affordability resulting static

house prices and falls in real terms

SALES STAGNATION

High deposit requirements

constrain transactional activity in the mortgaged

market

Unlikely given capacity for price rises based on current levels of affordability and

prospects for growth in

household income

Disposable Income

UK House price

2014 3.1% 6.5%

2015 3.4% 5.0%

2016 4.3% 4.5%

2017 5.8% 4.0%

2018 5.5% 3.0%

5 year 24% 25%

Mainstream ResidentialFive Year Forecasts2014 - 2018

The Scottish Prime Market

2008 2009 2010 2011 2012 20130

500

1,000

1,500

2,000

2,500

3,000

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

Sales Stock Sales to Stock

Source: Savills

The international element

Source: Savills

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Buyers from EnglandOther International Buyers

Prime regional forecasts

2014 2015 2016 2017 20185 years to end2018

Prime London

4.5% -0.5% 7.0% 5.5% 4.5%

23%

Prime Regional

4.5% 1.0% 5.0% 5.5% 5.0%

23%

Prime Scotland

1.0% 2.0% 4.5% 4.5% 5.0%

18%