UK house prices are expected to increase by between three per cent and five per cent in 2015, a new report from the Halifax has predicted.
The latest house price inflation report listed several key factors as limiting demand in the coming year, including higher interest rates and a decline in affordability.
Despite this, the report suggests that economic growth, increased employment, low mortgage rates and a gain in ‘real’ earnings could ensure demand remains strong. Price growth in the New Year will be particularly pleasing for property investors and buy to let landlords who will see capital gains increase as a result.
Regional variation is expected to remain in 2015, although the report does suggest that demand and activity at the top end of the London market could reduce due to economic pressures. In the long term, price growth is expected to increase broadly in line with income growth while higher levels of house building should limit upwards house price pressure, claims the report.
“The fortunes of the housing market are closely tied to developments in the wide economy,” said Halifax’s housing economist, Martin Ellis. He explained that the improving UK economy has boosted demand in the past two years, which also increased investment and a surge in the buy to let market.
House prices in the three months to October were 0.8 per cent higher than in the preceding three months, marking the third consecutive decline in the quarterly rate of increase. Annual price growth in the three months to October slowed to 8.8 per cent from 9.6 per cent in September however the latest buy to let index from Your Move and Reeds Rains revealed that buy to let landlords have seen gross returns of £22,434 in the past 12 months. That represents returns of 13.3 per cent across the year with around £14,000 of that total coming as capital gain.
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