London House Prices to DROP in 2015?
A new forecast by the Centre for Economics and Business Research predicts that UK house prices will drop by 0.6% in 2015, with London prices set to fall by 3.3%.
This is in stark contrast to last year’s rise of 16.8% in London house prices. There are a number of reasons for this expected fall in property prices, such as the potential introduction of a mansion tax and the promise of an increase in available London housing. The possibility of interest rises from the Bank of England is also a concern, and could put off buyers from making new property purchases. The current high prices of London properties are also expected to cause a decline in foreign interest. The slowing economic growth of countries like Russia, which has long been a source of foreign investment in the London market, will likely lessen the number of overseas buyers. The Department for Business, Innovation and Skills points to this downturn in foreign investment as a serious concern, considering that 17% of London properties sold since 2010 have been to overseas buyers.
The slowing of the market is already evident, according to the Centre for Economics and Business Research, in the decreasing number of buyer enquiries and the increasing amount of time for which properties are on the market.
By contrast to this prediction, Savills expects the prices to rise by 2% in 2015, the Royal Institution of Chartered Surveyors is predicting a price increase of 3%, Halifax predicts 3-5%, and the Office for Budget Responsibility is suggesting a rise could be as high as 7.4%.
The Centre for Economics and Business Research warns against the optimism of stamp duty’s positive effect on UK property sales, as the “boost” to the market will not be enough to prevent an overall price drop.
Read more at This Is Money.