Taylor Scott International News
Overall UK house prices are expected to tie by 4.1% in 2016 and by 20.3% cumulatively in the five years to the end of 2020, according to new research. However, as always national average performance disguises large regional variations that still characterise the UK market, the analysis report from international real estate firm Knight Frank shows. In the prime London and prime country markets higher transaction costs will continue to weigh on activity and price growth in 2016 as the market absorbs stamp duty, it points out and prime central London prices are forecast to rise by 2% in 2016 and by 20.5% cumulatively by 2020. Overall, values are growing more strongly in the South of England, particularly London and the South East, compared to slower growth in the North of England, Scotland and Wales. ‘These regional differences are unlikely to unwind significantly in 2016, although the improving economic and employment picture, especially in the regions, will underpin pricing,’ the report says. It also explains that interest rates continue to play a key role in the market. ‘While capital values will continue to be supported by ultra-low interest rates, the discussion has now turned to when, not if, the Bank of England will start to raise rates and markets are pricing in a rise in the second half of 2016,’ it adds. The report also points out that current ultra-low base rate, alongside an increased appetite for lending among banks, has led to record low mortgage rates, and mortgage lending has risen during 2015. The flip-side of this trend however, is that the best mortgage rates are generally only available to those who have access to sizeable deposits or equity. ‘While there are now more mortgage deals available to those with only a 5% deposit, a trend which will continue into 2016, the MMR mortgage rules mean that clinching a mortgage deal will continue to be challenging for some, especially for first time buyers,’ the report says. ‘Activity in the market has stabilised at around 100,000 transactions a month, although it is interesting to note that the cut in stamp duty for homes worth less than £1.1 million in December last year and the definitive general election result failed to produce an increase in activity. This was closely linked to a lack of stock on the market, particularly second hand stock,’ it adds. The analysis also looks at supply and demand and says that a lack of available homes to buy will likely continue to put a floor under pricing in 2016. ‘There is now even more emphasis on the delivery of new homes, and while levels of house building have picked up in recent years, the supply of new build dwellings is still far below Government targets,’ it points out. It also points out that the prime London property market faced a number of headwinds in 2015, led by the increase in stamp duty and higher transaction costs will continue to… Taylor Scott International
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