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UK Property Market Predictions For 2015

UK Property Market Predictions For 2015

What Will Happen To
The UK Property Market In 2015?

Happy New Year to all our readers, and welcome to the usual confusion over what the year ahead will bring for the UK property market.

Property prices are still predicted to rise in 2015, albeit at a much slower pace than in 2014, with economists and property experts providing forecasts ranging from 3% to 5% property price growth.

However, there are a few events that might affect the UK property market in 2015, namely the general election that will be held in May and the growing probability of Bank of England (BoE) raising the base interest rate.

Regarding the general election, it all could depend which party wins or what coalition combination is named to form the Government, after Labour recently confirmed that they would introduce a mansion tax if they come to power. Meaning that the changes to Stamp Duty that were announced in the 2014 Autumn budget would be negated if Labour win.

Less clear is what will happen with Bank of England interest rates. It had been predicted that a small rise, either by a quarter to half of a percent, was going to be introduced before the end of 2014, but that didn’t happen. Then it was going to be early 2015 but that is now also looking very unlikely.

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One In Five Property Buyers Pay Over The Asking Price To Secure Purchases

One In Five Property Buyers Pay Over The Asking Price To Secure Purchases

20% Of Property Buyers Are
Willing To Pay Premium Prices

One in five buyers willingly paid more than the original asking price for a residential property during the month of March, as the competition in the UK property sales market continues to heat up, according to the latest data published by the National Association of Estate Agents (NAEA).

According to the NAEA data, the average number of residential properties available for purchase through estate agencies across the UK has fallen for the sixth consecutive month (March 2014) resulting in the number of properties available for sale reaching an almost a 10-year low.

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Budget Sparks Property Price Increase Fear

Budget Sparks Property Price Increase Fear

UK property prices set to soar by 30%
Says Office for Budget Responsibility

UK residential property prices could increase sharply over the next five years, fuelled by a rise in the number of savers choosing to invest in property rather than taking annuity.

The forecast comes from the Office for Budget Responsibility (OBR), following the changes announced in George Osborne’s latest Budget which means that people will not be forced to take an annuity when they retire and instead they can choose to invest their money as they wish.

Many people are expected to use their pension pot to invest in property, rather than in currently poorly performing pensions, driving up UK property prices in the process.

The OBR has revised its forecast for UK residential property price growth in the next five years from 27% up to 30.8%.

According to the Office for Budget Responsibility forecast, anticipated UK residential property price growth is expected to be:

  • 8.6% in 2014/2015
  • 7.4% in 2015/2016
  • 4.3% in 2016/2017
  • 3.7% in 2017/2018
  • 3.7% in 2018/2019.

The predictions are the OBR’s best guess, they are not accurate in any way shape or form and should be used as a guide only. These are not fact, just speculation.

The OBR are supposed to be an independent fiscal body, however, they estimate that by the end of their forecast period, UK property prices should be just 0.5% below their pre-crisis peak, and the property price to income ratio is estimated to reach 2.3% below its pre-crisis peak.

The OBR also expects transaction volumes will increase at a faster pace than originally forecast over the coming five years. Estimating 1.28 Million housing transactions in 2014/2015, some 6% higher than the previous OBR forecast in December 2013.

The OBR also predict that Stamp Duty receipts will rise 90% over the next four years from £9.5 Billion (GBP) in 2013-14 to £18.1 Billion (GBP) in 2018-19.

The OBR report said: “House prices have continued to accelerate since our December forecast with annual growth reaching 5.5 % in December 2013. We expect house prices to peak earlier than in our December forecast at 9.2% in the 3rd quarter of 2014, with prices rising by around 30% by 2018-19.”

Property price growth is currently being led by London where even large estate agency groups like Savills forecast property values to surge by almost a quarter over the next five years.

According to a five-year outlook recently published by Savills, a number of risks to the prime property markets, such as Eurozone default, have receded over the past two years and Inner London boroughs could see a growth of 23.1%, and property prices in other areas of the capital could also rise by 22.7%.

Which is the best residential property price index?

Which is the best residential property price index?

If you are a property investor looking to conduct thorough due diligence before purchasing property, which of the conflicting reports from different monthly house price indexes do you rely on?

Below is a quick overview of the four main index providers, provided by Quick Move Now!, along with some handy notes for how to interpret their data, and a comparison of their reporting of residential property prices during 2012 

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Residential Property Sales Hit Three-Year High

Residential Property Sales Hit Three-Year High

Residential property transactions in the UK reached their highest level in three years, as would be buyers begin to take advantage of the continuing record low interest rates and the increased availability of residential mortgage loans, according to a survey of estate agents.

The monthly market survey from the Royal Institute of Chartered Surveyors (RICS) found that the increased availability of cheaper residential property mortgages and home loans has been boosted by the Bank of England’s (BoE) Funding for Lending Scheme (FLS) and this in turn has led to a pickup in residential property transactions.

Surveyors reported that many agents have sold an average of 17.4 residential properties to new first time buyers in February – up from the previous average of just 16.8 in February 2013, but property transactions remain significantly below the unprecedented levels reached in the early-mid 2000s, at the height of the last UK property boom.

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Residential property prices across the UK slumped in April, according to the latest Royal Institute of Chartered Surveyors (RICS) housing market survey.

Across the UK, 19% more chartered surveyors reported property valuation falls rather than rises in house prices.

Expectations for future residential property prices also reached their lowest point with a net balance of 17% more respondents predicting further drops.

Demand from potential buyers was relatively flat during April 2012 as 5% more surveyors reported increases rather than decreases in new buyer enquiries (from +10% in March).

Meanwhile new instructions were stable as 1% more respondents reported falls rather than rises in new residential properties coming up for sale. Whilst the trend may appear flat, the level of supply has not seen any significant drops since July 2011.

April’s property transaction levels entered negative territory for the first time since September 2011, as 6% more RICS surveyors across the UK reported decreases rather than increases in transaction levels.

London was the only part of the UK to observe a residential property prices rise, while the West Midlands and Wales saw the most significant declines.

Whilst the RICS predictions for future property prices saw a notable dip, expectations for transaction levels once again remained positive with a net balance of +15% more respondents expecting sales to rise over the coming three months.

Global Director for Residential Property at RICS, Peter Bolton King, says: “With the recent surge in activity brought on by March’s stamp duty holiday coming to an end, it is unsurprising to see that prices across much of the country are continuing to fall. Renewed concerns over the economy and talk of a double dip recession dominating the headlines in recent weeks may well have served to undermine consumer confidence. What’s more, the continuing lack of affordable mortgage finance is still hindering many first time buyers who cannot afford to get a foot on the property ladder.”

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