Development lender Atelier has today (28th May) published its report ‘Past performance points to future potential’ — compiled by Nicole Lux, senior research fellow at London’s Bayes Business School — predicts a significant upturn in market conditions, pointing to a sustained period of recovery, stabilising interest rates, and growing demand for housing.

Following analysis of primary data sources, dating back to the start of the ONS house price statistics in 1969, the report examines the long-term historic trends and forecasts a medium-term outlook for the key factors driving the property market, including property values, inflation, interest rates, demand, supply, mortgage rates, unemployment, and population growth.

The study suggests that the number of households could climb by 7.1% between 2018 and 2028, equating to an average of 164,000 additional households per year.

By 2043, the number of households is projected to increase to 27 million, a rise of 16.2%.

To determine structural demand for housing, Atelier identified population growth, unemployment rates, and household formation as key contributing factors for residential demand.

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The report found:

• UK unemployment is close to historic lows, leading to strong structural demand for acquiring residential assets. When interest rates were high in 2007, unemployment was much higher than today
• UK population growth is at its lowest since 2001, representing a fall in a recent trend of high growth. However, aggregate demand for housing is expected to be driven by changing household formations

Rebecca Nutt, director of portfolio management at Atelier, commented in the report: “Though this data points to a levelling off in population, it’s important to think about how that plays out on the ground.

“For the long-term foreseeable future, housing demand is not going to be met.”

The analysis highlighted that, since 1987, residential values have grown at 6.8% per year.

“We wanted to provide data and insight to SME property developers to help them plan for the medium- and long-term,” added Chris Gardner, CEO at Atelier.

“It is important for developers, in particular, to be agile enough to overcome short-term market volatility while progressing forward with a clear, long-term strategy.

“Property is a long-term asset class and, with the data now available to us, we are positive about the future, and we are here to provide finance solutions to professional property developers ready to act.”