Insight 4 – What will happen to property prices in 2015
As 2014 comes towards an end I thought that I’d sit down with a sherry and ponder what will happen in the future. The future of house prices that is, nothing else really matters to me. I’m optimistic. The recovery is well underway and the country is looking in a fine state. If you are thinking of selling, go for it. Prices have been rising and there is probably equity to release and move up. If you are thinking of buying then I’d avoid the big smoke that is London and look in some of the hotspots below.
Predicted House Price Growth
“London is on the slowdown and now is a great time to sell to release money. Cash in on the investment. Out of London things are on the rise and there are some hotspots to buy investment properties like Bristol, Southampton and Manchester. Birmingham, Shrewsbury and Warwickshire are my tips for bigger than average rises as they are seeing investment in infrastructure, the labour market is strong and there is a recovery in incomes and they are vibrant and beautiful places to live. Oxford Economics are predicting 26.5% growth in the West Midlands, so I have some informed support in my predictions.”
There are now signs of a slowdown in Greater London, stretched to its limits of affordability.The average asking price of a home in London has tumbled by more than £30,000 over the past month, figures from property website Rightmove showed in December, with new sellers in all of the capital’s boroughs seemingly becoming less optimistic about the price they can achieve. However despite the drop, average asking prices of homes coming onto the market across London are up by £57,000, or 11.1%, on December 2013. I predict house prices in London will continue to fall in 2015 and now may be the time to think about selling
We are seeing a London ripple effect with prices outside of the capital predicted to rise between 4-6% in 2015 and 30% over the next five years, according to Rightmove. The stamp duty reforms are likely to boost values of homes coming to the market in the first half of 2015 and as demand rises for properties and a lack of supply, it’s an encouraging position for homeowners putting their home up for sale.
The General Election
“The election will no doubt have a tax effect. Whether it is mansion tax from Labour, increased council tax from the Lib-Dems or capital gains tax on foreign buyers (probably a mix of all three) and it is likely that in the first half of the year there will be lower than usual homes coming to the market because of uncertainty. I think that those being brave and putting their home for sale in January or February will reap the rewards as there will be a lack of supply and buyers will be scrambling for well priced, quality homes.”
Everyone is determined across the UK to build more homes and all three major political parties support this. The housing market is a critical issue in the election and parties will be keen to avoid upsetting homeowners too much.
Then there is the much speculated interest rate rise. I don’t think we’ll see a big interest rate rise in 2015, if there is one, experts are speculating 0.5% in summer or autumn. There’s no justification for a larger increase. There is uncertainty about the general election in May but all parties are going to do broadly the same thing. The market and house prices are going to be a lot more stable than people think.
“We are not going to be seeing the meteoric rises that London have seen over the past couple of years and I think this is a good thing. People will be more realistic with pricing and there is less chance of seeing the disastrous bubbles being created. Growth out of London looks healthy and if you are thinking of moving from London to the countryside than you are in for a windfall. If you want to live in the West Midlands, now is the time to buy and if you want to invest in a buy to let property I would be looking at Birmingham.”