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House prices to rise by 3% in 2015 and rents by 2% says RICS
House prices in the UK will see an average increase of 3% in 2015 bolstered by recent changes to Stamp Duty, continuing demand and lack of supply of property, it is predicted. Rents are set to grow by 2% and sales are expected to increase, according to the annual housing market forecast from the Royal Institution of Chartered Surveyors (RICS). Across the UK, RICS expect all parts of the country to see modest price rises during 2015 with the South West, Wales and London set to experience the lowest rises with prices increasing by 2% and 0% respectively. Having outperformed in the early stages of the recovery, chartered surveyors reported London's housing market was 'pausing for breath' both in terms of pricing and activity towards the end of 2014. This does however mask significantly different behaviour across different parts of the capital and is reflected in the RICS forecast with the eastern boroughs and some other non-prime areas still likely to see more buoyant market conditions persist through 2015. The growth in rental demand softened in the early part of 2014 as the sales market began to recover across the UK, and potential purchasers took advantage of the Help to Buy scheme, the report says. However, enquiries to rent property have begun to pick-up once again and comfortably outstrip new supply of rental property from landlords. As a result RICS expects rents to continue pushing upwards over the next 12 months. Chartered surveyors are suggesting that the strongest rises are likely to be recorded in the South West and the North East of England. Rents in the capital are likely to rise broadly in line with the national average. The number of sales transactions should see a further increase during 2015, moving up to 1.25 million from 1.22 million in 2014. Although there are some concerns about mortgage availability in the wake of the Mortgage Market Review, a firm economy and stamp duty reform should underpin activity levels. The report points out that although this figure represents an improvement on the past few years, to put this in context, in 2006 total transactions stood well above at 1.67 million. Lack of supply to the housing market remains a running trend, and one that cannot be addressed fast enough. However, there are increasing levels of house building projects underway, and as a result, RICS forecast housing starts to rise to 155,000 in England during the year. This is compared to 125,000 in 2013 and only around 100,000 in 2012. While this is an encouraging trend, it is still insufficient to address the more rapid growth in population and will leave significant shortfalls in all tenures. The number of houses taken into possession are expected to have fallen in 2014 to around 23,000, the lowest since 2006. Given the current macroeconomic picture, RICS anticipates that this could decline to below 20,000 over the course of the next 12 months, particularly as around 90% of new loans… Continue reading
Property price growth in London now behind five other UK cities
Property growth in London now lags behind five other UK cities as the capital’s house price growth has dropped by two thirds in just three months. Edinburgh, Glasgow, Southampton, Bristol and Birmingham property markets have seen faster growth than London in the last quarter, according to the latest cities house price index from Hometrack. It also shows that while overall UK house prices have risen by 8.9% year on year, the rate of house price growth in the last quarter has slowed across 16 of the 20 cities. The firm is predicting house price growth of 2% in 2015. House price inflation in London at 0.5% was the same average growth as Manchester, Portsmouth. Some key cities saw price growth diminish, most notably Aberdeen down 0.4% and Cambridge down 0.2%. Other cities showed a pronounced slowdown in price growth such as Oxford seeing a quarterly rise of just 0.3%, Cardiff at 0.2% and Bournemouth at 0.1%. But Scottish cities bounced back with Edinburgh at 1.8% growth and Glasgow at 0.9%, both continuing to register above average rates of growth as demand feeds back into the market after the independence. However, house prices are above their 2007 peak in eight cities with London up 30.5%, Cambridge up 28.7% and Oxford up 21.9%, but these are also the markets starting to register the clearest slowdown. This translated to an average annual increase in London property values of £57,000, which is nearly four times the national average of £15,200 and almost twice the UK’s average income. Liverpool recorded the lowest increase in values with just £3,000 added to house prices in the last year. ‘The high growth cities over the last year are now recording the fastest slowdown and this is most pronounced in smaller cities such as Cambridge and Aberdeen. The Aberdeen economy is closely related to the health of the oil industry and a weakening oil price is impacting the housing market,’ said Richard Donnell, research director at Hometrack. ‘The slowdown in London, which we identified in, will act as a drag on the UK rate of house price growth over the next 12 months. The rate of growth in house prices is starting to lose momentum across other cities in southern England, while across the rest of the country modest levels of house price appreciation continue as prices rise off a low base,’ he explained. ‘Overall we expect modest UK house price growth of 2% in 2015, which is more in line with earnings growth. Significant pent-up demand has feed back into the market in the last two years pushing house prices higher in all cities but the underlying rate of growth is now slowing across the majority of markets,’ he pointed out. He also said that the introduction of mortgage market affordability tests in the middle of 2014 has reduced the overall impact of low mortgage rates on house prices. ‘A… Continue reading
Rest of UK expected to catch up with London and South East price growth in 2015
In 2015 UK regions outside of London and the South East of England will catch up on the property price growth that has topped the market this year, according to agents. The National Association of Estate Agents (NAEA) predicts that in 2015 London and the South East will show slower growth in terms of price. With stamp duty reforms now in place, agents are hoping for greater supply in the market nationwide as there's more encouragement for people to buy and sell houses. ‘Areas outside London and the South East, where the market has been slow in terms of volume and price, will hopefully catch up with London and the South East in the next year,’ said Mark Hayward, NAEA managing director. He pointed out that currently supply in terms of construction is too low to be able to meet housing market demands. ‘Although the number of new homes being built has risen, and the three main political parties have created large new build targets, the lack of capacity within the market means that the gap between supply and demand won’t close and we currently don’t have the resources to respond to the problem,’ he added. Agents also believe that the general election will cause uncertainty, whichever party is likely to come in to power and with the housing market being based solely on sentiment, any uncertainty may result in a temporary lull. However, Hayward said the general feeling is that this will have long lasting implications on the market. He also mentioned the expected interest rate rise next year. ‘At present it’s anticipated to rise in the latter part of 2015, and the Bank of England feels this will have little effect on current mortgage holders and first time buyers. However, our research among NAEA members suggests the impending rate rise will influence demand, with 70% of agents already reporting signs of demand dropping. It is likely that the imminent rate rise will continue to affect demand, as well as affordability,’ added Hayward. David Cox, managing director of the Association of Residential Letting Agents (ARLA), explained that supply is also low in the private rented sector. ‘Simply put, we need more houses. Demand continues to outstrip supply. As new homes come on to the market at one end from both foreign investors and landlords in London and South East who are buying up portfolios in the north of the country we’re also seeing accidental landlords leaving the sector at the other end,’ he said. ‘However, even… Continue reading
