UK house prices have been predicted to rise by an average of 1.5% in 2015, but London prices are likely to fall by an average of 3.8%.
The Centre for Economics and Business Research (Cebr), as reported by The Guardian newspaper, thinks that UK-wide prices will rebound, while prices in London will dip following “years of over-performance”. If they are right it will be the first time since 2009 that prices across the nation have risen faster than in the capital.
London house prices in 2015 are coming under pressure as result of election uncertainties: the weakness of the euro, the treat of a mansion tax, increases in stamp duty in the capital and now threats of tax rises for non-doms.
However, according to the Cebr research, any dip in London prices should not last long and by next year they expect a rise of around 2.7% in the capital and 2.3% nationwide.
Cebr thinks that London market tends will be particularly affected by the uncertainty of the coming general election in May, but longer term they see further economic growth and a continuing shortage of housing supply pushing prices up further.
Nina Skero, a Cebr economist and the author of the report, told The Guardian newspaper:
“Outside of London, the outlook for house prices this year has improved after a few months when the market appeared to be coming off the boil. December’s stamp duty changes, as well as rising household incomes, are lifting prices in many parts of the UK.
“In London, however, we expect prices to decline by 3.6%, driven by a significant weakening at the prime end of the market. A potential mansion tax, reduced overseas interest and hefty new stamp duty rates have hit demand for high value property.”
Cebr has revised its previous forecast given in January when it stated that UK house prices would fall by 0.6% this year, citing changes to stamp duty in December as the reason, which have made it easier and cheaper to buy for the most homebuyers.
The forecasts are a long way from historical figures which show that the recovering housing market in 2014 resulted in London prices rising by 17.4%, while nationwide prices increased by 10%.
By the end of 2014, the ripple effect of a migration out of top-price London for many, and the stabilising influence of a tightening mortgage regime, resulted in a more evenly-balanced housing market across the UK.
House Prices to Rise by 1.5% Nationwide but London Prices are Likely to Fall by an Average of 3.8% – http://t.co/1PDSj24B7I
— LandlordZONE (@LandlordZONE) April 13, 2015