Flat or growth in the housing market – depends who you ask

A happy new year to you all. I hope you managed to spend some quality time with your family and friends. Seems a bit strange saying that as I already feel like 2015 has been going for a good month or so.

Well we ended 2014 on a bit of a low with house price growth pretty much grinding to a halt by the end of year and most predict this will continue in 2015. I am still optimistic for growth in 2015 in the regions as foreign investment moves outside the M25.

Nationwide shows that across the UK house prices were up 7.2 per cent over the whole of 2014, but in December prices rose by just 0.2 per cent on average. St Albans in Hertfordshire was the city with the strongest house price growth across 2014, with prices there rising faster than in London. The average house price in St Albans has jumped by 24 per cent over the year while the capital recorded a 17.8 per cent increase. St Albans – a commuters dream (or maybe not).

The general property economist would say that given price increases over the past few years that further growth is restricted. I would focus more on the nervousness given the looming general election. Think wider people, most house prices (particularly in the North) are still below pre-recession levels and there is always the following to put a smile on your face:

·    Both Hometrack and Savills predict price rises nationally of just 2 per cent in 2015 while Halifax and the RICS are both a little more optimistic, predicting rises of 3 per cent across the UK. Some are also saying Yorkshire will undergo the largest rises with 5 per cent. I think that is potentially a little too adventurous but somewhere in the middle around 4 per cent sounds good to me.

 

·    The election is likely to be a huge issue for all parties with some already waving their manifesto. Anyone remember that mansion tax? The Conservatives gave us all a positive shock by reforming stamp duty, which was good news for anyone buying a house less than £937,500 (so a lot of people).

·    So a mansion tax. The impact is difficult to say but the main focus will be on London, few homes up North are worth more than £2 million. Stamp duty was the real benefit. The stamp duty tax cuts on homes under £1 million could also improve demand for such homes this year. I say take advantage and make the move, particularly before interest rates rise – fix it now and enjoy some more space.

·    In 2014, we took advantage of the housing market to upsize and move further into the countryside and this is what a lot will do in 2015, mainly in the South with people cashing in on the capital’s huge price rises. With improved infrastructure, particularly trains, this may benefit the North with commuting times to the capital reducing and the cost of living being significantly cheaper.

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

Enjoy the weekend

Lee

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