UK house prices set to ‘outperform London’
For the first time since 2009, housing prices nationwide are set to outperform those in the capital.
The Centre for Economics and Business Research (CEBR) says it expects UK house prices generally to rise by 1.5%, but dip 3.6% in London in 2015 as result of the euro’s weakness, mansion tax fears and raised stamp duty in capital. This is the first time since 2009 that prices nationwide will have risen faster then in the capital following “years of over-performance”.
However, the predicted dip in the capital will not last for long, as in 2016 prices are expected to rise by 2.7% in London and 2.3% across the country.
CEBR also pointed out that the London market – where an average home now costs more than £500,000 – is being affected due to the uncertainty of the general elections and the Euro’s weekess.
The CEBR went on to say that economic growth and a lack of housing options will also lead to greater price rises outside the capital, where the average price is £193,000.
Nina Skero, a CEBR economist and the author of the report, said: “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.”
In January the CEBR said that property prices were expected to drop overall 0.6% this year, but it has revised up its prediction, saying changes to stamp duty in December, which made it cheaper for the most homebuyers liable to pay it, have been felt sooner than expected.
CEBR said the reduced overseas interest due to strength of sterling against the euro, changes to the stamp duty on homes worth more than £937,500, coupled with fears that a Labour election win could trigger the introduction of a mansion tax, has led to a significant cooling in the residential housing market particularly in more affluent areas, including London.
It said that fewer new buyer enquiries and properties taking longer to sell also indicate that prices are set to edge down in London.
A decline in overseas interest in UK property would be much less strongly felt outside London, the CEBR said. At the same time, most homebuyers have benefited from the recent stamp duty changes and an improving labour market.
Written by: The Team | On: April 15, 2015