Taylor Scott International News
UK house prices are set to fall next year as price growth as got ahead of itself in 2014, but they will start rising again in 2016, according to a new analysis. According to the Centre for Economics and Business Research, house prices are about to hit a turning point. It’s report says that so far 2014 has seen largest rise in home values since the Prices this year are expected to rise by 7.8%, more than double the 3.5% national average increase last year. But now young buyers risk being priced out of the rising market, while an expected rise in interest rates will ‘startle’ prospective home owners, the report says. Scott Corfe, a director at the CEBR, pointed out that leading indicators already point to price declines in some parts of the UK, alongside falling new buyer enquiries and properties staying on the market for longer before they sell. ‘Affordability has become such an issue in the more expensive regions of the UK that buyers are starting to baulk at high prices. New mortgage rules, introduced in April, have also led to a slowdown in lending that will ‘curb demand for property in the short term’, he said. A rise in interest rates from the Bank of England next year is also expected to cool house price growth in the short term. ‘Although rises are expected to be very gradual, with rates remaining much lower than before the financial crisis, prospective buyers are likely to be startled by the first such increase, leading many to hold off from making purchases. This too will lead to lower prices,’ he explained. But he stressed that the CEBR is not anticipating a crash as the market is adjusting after getting ahead of itself at the start of 2014. It predicts that, after slipping in 2015, prices will start to rise again, growing by 2.6% in 2016, 3% in 2017 and another 2.7% in 2018. Howard Archer, an economist at IHS Global Insight, has previously said he expects house prices ‘to rise at a more retrained restrained rate over the coming months’. Taylor Scott International
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