And a brief look at 2016
2015 has been a turbulent year for the UK property market, with much change to all sub-sectors including investment property, first-time buyer homes, and residential house prices in general. CBRE predicted at the end of 2014 that 2015 would be a “prosperous year” for the UK property market. How did it fare? Read our brief sum-up of key Property Market points from 2015.
Which key drivers affected the property market in 2015?
The General Election was a major event in 2015, with uncertainty, as expected, before the election, and then a “settled-in” period following.
The announcement in the Autumn Statement regarding Stamp Duty Land Tax (SDLT) on buy-to-let properties, although it doesn’t come into force until 2016, is already starting to take an effect on the decisions of property investors and we are likely to see a very different investment property market in 2016.
In 2015, the continued low interest rates played a part in encouraging movement within the property market, as well as government initiatives to help first-time buyers, such as the Help-to-Buy Scheme, all contributing to the efforts of the UK property market recovery.
However, the cause of recovery is deemed to be deeper than just low interest rates; there is a renewed confidence and investment appetite, making property highly valuable for investors.
‘There is more to the property recovery than just low interest rates … the difference is a renewed confidence in occupier demand.’ CBRE
Rising house prices
At the start of 2015, CBRE forecast just under 13% total returns to property prices within the year, after an almost 20% average in 2014. They forecast a price growth in housing at just 6%.
“Price growth in the housing market looks likely to ease somewhat in 2015 – we predict price growth of around 6% in 2015…” CBRE
PwC also predicted in their mid-year forecast in July 2015, that there would be broadly a 5% increase in house prices come the end of 2015.
Rightmove figures show that property prices will be around 7.4% higher at the end of 2015, than they were at the start, showing that expectations were by far exceeded.
An average house price, according to Rightmove, is now just under £290,000, across England and Wales, compared to £270,000 in December 2014.
In London, house prices are almost 10% higher than they were one year ago with an average property in excess of £616,000.
Investment property market
CBRE also predicted that 2015 would see significant rental growth due to the attractiveness of property investment and the level of money entering the UK from overseas investors.
This has certainly been the case, with the rental market exponentially rising in 2015.
The Council for Mortgage Lenders (CML) reported buy-to-let mortgages had increased by 36% in the past 12 months. This coupled with data from Paragon, specialist investment lenders, which showed over 100% increase in buy-to-let lending in just a few months, shows clear results in this sub-sector.
2016 – what’s on the horizon
In terms of property prices, although December has taken a little dip, Rightmove are predicting house prices will continue to rise into 2016, with another £17,000 hike over the next 12 months.
“Whilst a fall is the norm at this time of year, this is December’s best post-financial crash performance, signalling another round of price rises in 2016.” Miles Shipside, Rightmove
For investment property, the new SDLT rules appear to be deterring investors already, with thousands of unbuilt flats and apartments due to come back onto the market in 2016 and 2017, after overseas property investors look to cut their losses. This is according to Cluttons Estate Agency, who predict as many as 30,000 could be released. Could this be an opportunity for first-time buyers?
However, with London becoming increasingly unaffordable, there is expected to be more young professionals heading to other UK cities such as Manchester, Leeds and Cardiff.
It will no doubt be another interesting year for the UK property market, and Dental & Medical Financial Services will continue to keep you updated via our blog and newsletter.
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