UK property prices expected to rise 9% this year and 5% in 2015
Property prices across the UK are set to finish 2014 up by 9% and rise another 5% in 2015, according to the latest outlook report.
Real estate firm Strutt & Parker expects good growth despite prices cooling and the looming general election next year in a report compiles with its retained economic advisors Volterra.
But the outlook for the prime central London market is more subdued with Strutt & Parker predicting growth of 3% in 2014, and a further 2% in 2015. These forecasts are a stark contrast to 2010 and 2011 when prime central London prices surged by over 13% year on year.
The firm believes that whilst improved economic foundations would certainly suggest that prices will continue to rise over the next few years, the biggest perceived uncertainty surrounding the property markets over the remainder of 2014 and 2015 will continue to be the looming election.
‘Agents are reporting a continued slowdown in some areas as buyers and sellers nervously await news on the upcoming general election and the potential for a mansion tax. This is beginning to feed through into transaction levels. As is often the case in uncertain times, it may also be that transaction levels will decrease in the run up to May 2015, but values could hold up better than expected,’ said Stephanie McMahon, head of research at Strutt & Parker.
‘Above and beyond the general election there are a number of other potential headwinds slowing the property market, including talk of interest rate changes and the Mortgage Market Review (MMR) and the slowdown it is causing,’ she explained.
She pointed out that it is important to remember that the property market is all about supply and demand. ‘On the supply side, the government is continuing to boost house building across the country, and recent output figures from the construction sector reflect this. House prices tend to rise when stock is low and with more houses being built, particularly in the lower end of the housing market, this could also have an effect on UK house prices over the next few months,’ said McMahon.
‘The main driver for price market price growth in recent years has indeed been the consistent shortage of good quality housing stock in highly sought after prime locations. Any future increase of supply to the market in central London would therefore put downward pressure on prime central London house prices and we have taken this into consideration in our London predictions,’ she added.
‘In short, we expect that price growth during the remainder of 2014, and even more so in 2015, will be sensitive to prevailing political press and expectations,’ she concluded.