The rising population in the UK and Ireland combined with a housing supply shortage and robust economic growth will support housing demand and property prices, says Moody’s Investors Service in a new report.
The research from the ratings agency, based on data from Eurostat, comes following last week’s warning from Swiss bank UBS that spiralling house prices in London meant the city was now at risk of a housing bubble.
Moody’s said the UK is projected to experience population growth of 3.2% until 2020, which will support housing markets in the context of a strong economic environment.
Despite Ireland’s population growth set to slow down to 0.2% over the next five years, Moody’s believes that the economic recovery will draw recent expatriates back and eventually support a rise in population, increasing housing demand.
Moody’s analyst Gaby Trinkaus said: “In our view, the rising population in these countries combined with a housing supply shortage and robust economic growth will support house prices and therefore help reduce losses on residential mortgage loans.
“Additionally, the size of the 25-35 age bracket, which forms the core of the first-time buyer segment, is expected to remain largely stable in the UK and the Netherlands until 2020. While this demographic is projected to shrink in Ireland based on Eurostat data, the economic recovery and improved employment rates will support the market.”
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