UK house prices to grow in 2015, as regional cities overtake London
December 19 2014 - 10:33AM
Property
Photo: Martie1Swart
UK house prices are forecast to continue growing in
the next year, albeit at a slower rate, as the market continues to
cool down. While concerns surround the 2015 election and the
potential base rate rise, though, the Stamp Duty reform is forecast
to boost activity, predicts the Royal Institution of Chartered
Surveyors.The latest RICs report forecasts that UK house prices
will see an average increase of 3 per cent over the course of next
year, as the Stamp Duty jumpstart continues demand amid an ongoing
lack of supply. Across the UK, RICS expect all parts of the country
to see modest price rises during 2015. The South West, Wales and
London will experience the lowest rises with prices increasing by 2
per cent and 0 per cent respectively.Indeed, London has seen a
significant moderation in 2014. House price grew 13.2 per cent in
the 12 months to November 2014, according to Home.co.uk, higher
than the rate of growth for average UK house prices (8.9 per cent),
but five cities registered faster growth than London in the last
quarter: Edinburgh, Glasgow, Southampton, Bristol and
Birmingham."We expect the rate of growth to slow to 2 per cent by
the end of 2015, dragged lower by a major slowdown in London,"
comments Home.co.uk.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.Growth in rental demand softened in the early
part of 2014, adds the RICS forecast, as the sales market began to
recover across the UK, and potential purchasers took advantage of
the Help to Buy scheme. 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, to a 2 per cent
increase in rents. The number of sales transactions should also see
increase during 2015, moving up to 1.25m (from 1.22m 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," comments the
RICS."Although this figure represents an improvement on the past
few years, to put this in context, in 2006 total transactions stood
well above at 1.67m."The main obstacle remains a lack of supply to
the housing market. Nonetheless, notes RICS, "we are seeing
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 100,000 in
2012. While this is an encouraging trend, though, the RICs says it
is "still insufficient" to address the more rapid growth in
population and will leave "significant shortfalls in all
tenures".Jeremy Blackburn, RICS Head of UK Policy, highlights how
important housing will be in the 2015 election: "The political
ambition to meet the UK’s housing deficit of 240,000 means that
debates around planning, development and delivery will monopolise
the pre-election period in the run up to May 2015. We’ve seen four
housing ministers in this Parliament and there is no reason to
think that housing won’t continue to be a political football in the
next."
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