A great 2014 is nearly over and it has certainly been a busy year with demand for new homes meaning excellent results for developers around the UK and Rightmove reporting an overall 7% increase in asking prices.
The year has seen sustained demand (with predictions of 1,000,000+ transactions likely in 2014 –Source: HMRC, seasonally adjusted figures) continuing low interest rates, Scotland remaining part of the Union, Stamp Duty reform and a general lack of new instructions all being reflected in increased average prices.
The year ends with Rightmove December House Price Index showing a -3.3% drop in average asking prices (also down 1.7% in November), however, their predictions for 2015 remain pretty upbeat with an anticipated asking prices to increase by 4-5%. Rightmove suggest that this price rise is likely to be driven by
“a shortage of property for sale in popular locations as stricter lending criteria, pre-election jitters and limited choice of trade-up properties dissuade some home movers from coming to market. Buyer sentiment aided by continuing low interest rate environment and boosted by Stamp Duty reform.”
Miles Shipside, Rightmove director and housing market analyst comments: “Whilst a near £9,000 drop is the biggest ever reduction in the price of newly marketed property compared to the month before and a sign of a market continuing to cool, a fall is not unexpected in December. Though sellers are fewer in number at this time of year, those that do come to market are often keener to sell so price lower in a bid to stand out. The overall picture for the year is still one of a much recovered property market, with sellers and their estate agents confident enough to be putting property on the market at a higher price on average than a year ago, although we predict a slower pace of price growth in 2015. This means that sellers and agents will have to work harder to achieve a sale next year.”
The Rightmove report goes on to say that this growth will be national with the London effect continuing its ‘ripple effect’ but this may not be the powerhouse as in 2014.
The Halifax House Price Index shows an annual change of +8.2% with prices also still up in November at +0.4% but the quarterly growth rate in decline. Commenting, Martin Ellis, housing economist, said: “House prices in the three months to November were 0.7% higher than in the preceding three months. The quarterly rate of increase has now declined for four consecutive months. Annual price growth in the three months to November slowed further, to 8.2% from 8.8% in October.
“Receding buyer interest combined with a revival in private housing completions has brought supply and demand into better balance. These factors have in turn contributed to the easing in house price growth since the summer. But housing demand continues to be supported by a strengthening economy, rising employment levels, still low mortgage rates and the first gain in ‘real’ earnings for several years. We expect a further moderation in house price growth over the next year with prices nationally expected to increase in a range of 3-5% in 2015.”
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