UK house prices to rise between 3% and 5% next year

A further moderation in house price growth in the UK is likely next year and house prices nationally are expected to increase in a range of 3% to 5% in 2015.

 



The prospect of higher interest rates at some point in the year and the deterioration in affordability over the past year are expected to be key factors curbing housing demand, according to the latest house price inflation report from the Halifax.


But housing demand should be supported by solid economic growth, higher employment, still low mortgage rates and the first gain in ‘real’ earnings for several years, the report suggests.

Halifax said it expects to see a more even regional pattern in house price growth during 2015.
Global economic worries could reduce demand and activity at the top end of the London market in 2015.

Further ahead, price growth is expected to rise broadly in line with income growth, as rising interest rates increase the affordability constraint on the market. Higher levels of house building should also limit upward house price pressure.

‘The fortunes of the housing market are closely tied to developments in the wider economy. The strengthening in the UK economy has contributed to higher housing demand over the past 18 to 24 months. There has been an increase in the number of buyers, fuelled by rising confidence and the improved cost and availability of credit. Higher demand, however, has not been matched by an increase in the number of sellers in the market, resulting in strong upward pressure on house prices in some parts of the UK,’ said Halifax’s housing economist, Martin Ellis.

‘The deterioration in housing affordability as a result of higher house prices, earnings growth that has been consistently below consumer price inflation until very recently and increased talk of an interest rate rise, appear to have combined to temper housing demand since the summer. Tighter mortgage rules may also have acted as a brake on activity. The weakening in housing demand has led to a modest easing in both price growth and sales,’ he explained.

Source: www.propertywire.com