Slower Property Market Growth Predicted for 2015
It’s the beginning of the year and recent reports this week show how the UK Property market is starting to stagnate. This is in vast contrast to the headlines 6 months ago that predicted that property prices will once again double by 2015. It’s almost inevitable that house prices will double again at some point but it may not be as soon as people think.
Usually people look towards mortgage lending figures to determine the strength and pace of the housing market and Figures from November 2014 showed a 9% year on year decline. Essentially it’s the banks who determine how much money they can allocate and who they will lend too, so even if house buyers do wish to take out a mortgage they may be turned away. The pessimistic sentiment from UK banks reflects a decline in growth throughout the Eurozone and there are serious concerns that we may once again enter a recession if the negative trend continues, off course if this were to happen then it’s likely that banks will be unable to lend and home sellers will be unable to sell their home.
Growth Predicted to Slow in 2015
All prices throughout the UK are now lower than their previous highs and it is predicted to be a year of unremarkable growth. In a house price article from The Guardian, Howard Archer who works for data producers Global Insight believes that year end growth will be at around 5%. When compared to the yearly growth of almost 8% during 2014 it does appear that housing market will be effectively moving backwards.
First Time Buyers will Benefit from Stamp Duty Cuts
Recent measures to reduce the level of stamp duty tax for homes below the value of £250,000 to just 2% and to 0% for homes that are below £125,000 should give a small saving for first time house buyers. These stamp duty cuts have been achieved through a Robin Hood style approach of taking from the rich to give to the poor, as those who own mansions are having to pay between 10% and 12% tax. However these measures may be in vein if first time buyers won’t be able to get a mortgage due to a lack of lending.
Ultimately, it appears that Landlords will once again be the winners in the property market as it’s predicted that even more potential home owners are going to have to rent, for this reason it’s predicted that rental yields will increase.