Record low mortgages will continue to stoke demand as will continued interest in buy-to-let as an investment choice despite falling yields caused by rising prices and a squeeze on lower earners’ real incomes.
The only region that will see lower asking price growth across England and Wales compared to 2014 is Greater London. A chief cause is a rapid rise in housing supply, with a 39 per cent increase already recorded in the capital since 2013. Home.co.uk is predicting a rise of 10 per cent in asking prices in Greater London over 2015, down on 2014’s dramatic rise of 15.9per cent .
The largest increases in asking prices are set to be seen in the East and South East of England. A rise of 11per cent is predicted for the East of England, up on 2014’s rise of 9per cent , while in the South East, an annual rise of 10.5per cent is anticipated, up 2.2per cent on 2014’s rise. A key factor in the optimistic predictions for these regions is their historically low supply of property, which is likely to offset any rise in stock throughout the year.
The North of England property markets, which have been beset with unemployment and financial pressures caused by austerity measures, look set to improve, albeit slowly.
A rise of 2.8per cent is predicted for the North West property market in 2015, marginally up on 2014’s rise of just 2per cent . In the North East, a rise of 1.8per cent is predicted, double 2014’s asking price increase of 0.9per cent , and in Yorkshire and the Humber, a rise of 3.5per cent is anticipated, up on 2014’s annual change of 1.8per cent .
Improvements will be more pronounced in the East Midlands, where growth of 7.5 per cent is predicted. This is 2.5 per cent up on the region’s 2014 increase.
The West Midlands looks set to be another winner, with an increase of five per cent predicted for 2015, up on 2014’s rise of 3.5 per cent. Wales’s growth is predicted to be 2.5 per cent, up on 2014’s rise of 1.5 per cent , and in the South West, a rise of 5.5 per cent is anticipated. This also compares well with the previous year when the annual change for the South West was 4.2 per cent .
It should be noted that the above predictions are based on a key assumption: no change in interest rates. Should there be even a small rise in the Bank of England base rate, market sentiment would be severely dampened. A more dramatic interest rate hike of 1per cent would likely bring down price growth to zero for 2015.