Looking Forward Into 2015
As 2014 draws to a close property companies are making public their forecasts for the year ahead. Next year will be an election year, with the traditional market slowdown expected by the various property specialists to have made predictions for 2015 and beyond. Already we are seeing price cuts being offered by sellers who are keen to make a sale before the end of 2014 or face waiting beyond the election as buyers sit back and wait to see the results of the election and the resultant market mood.
In short, the election in May 2015 is throwing up four key issues that are predicted to impact on the property market. The prospect of Bank of England base rate rises has been haunting buyers for a long time now – the new political environment could trigger the higher interest rates that have been rumoured for months. If so they will work against buyers and may hold back price rises. There is also the prospect of mortgages becoming harder once again to get hold of. Just as the effects of the MMR measures of April 2014 start to ease the Bank of England is believed to want the power to intervene directly in the mortgage market and limit the amount of mortgages that lenders can issue on properties of a certain value.
The future of Help-To-Buy is also in doubt, whether Labour or Conservatives hold power after May. Now we know the scheme has helped around 17,000 people into home ownership, but both George Osborne and Ed Balls are believed to be planning to scrap the initiative that underwrites purchases of up £600,000. Finally, the high end of the market and London especially could be hit with a Mansion Tax if Labour and the Lib Dems achieve election success.
Taken together all of this signals a slowdown in the market during 2015 as the uncertainty leads potential investors to hold back. All of the main parties have made grand proposals for new building schemes in the wake of the election, though whether these pledges are anything more than electioneering bluster remains to be seen. Buyers are similarly likely to hold onto their cash until the supply of affordable homes becomes a reality.
Quite what the scale of the slowdown will be is hard to predict. Strutt and Packer suggest price rises of just 2 per cent across 2015, on top of rises of 3 per cent this year – compared with rises of 13 per cent across both 2010 and 2011. Knight Frank forecast growth of 3.5 per cent, down from 7 per cent rises in 2014 according to their criteria.