House prices: what are the predictions for 2016?
12-25-2015
House prices: what are the predictions for 2016?
Inflation should slow, but supply imbalance will keep gains ahead of wage rises
Dan Kitwood/Getty Images
The past year has seen sharp price rises in the UK property market, exacerbating an affordability crisis as more and more people struggle to save enough for sky-high deposits.
Office for National Statistics data for October, the latest month for which figures are available, says prices nationwide have risen seven per cent over 12 months, notes Sky News. This is broadly in line with the estimate from online estate agency Rightmove, says the Daily Mail, which reports that it has seen prices rise six per cent in England and Wales during 2015.
Looking ahead, analysts at HSBC told Business Insider that the affordability crisis should actually ease in the coming 12 months – but not a lot. "We do not expect prices to fall in 2016 - just for inflation to slow a bit."
The slowing will be a result of measures by George Osborne to tackle buy-to-let, which has been booming in recent years as cheap borrowing costs, reduced yield elsewhere due to low interest rates and rapidly rising house prices have encouraged more to buy homes to rent. Next year a three per cent stamp duty surcharge will be applied to purchases of second homes and the relief on mortgage interest for higher-rate taxpayers is being cut.
But this will be offset by a continued supply crunch that means core demand will continue to exceed available housing and prices will be held higher. In fact, most are still suggesting that house price inflation will outstrip wage rises, locking more prospective buyers out of the market.
The latest forecast comes from the Royal Institute of Chartered Surveyors, which predicts prices overall will rise six per cent next year, the BBC reports. This will not be spread evenly, with East Anglia leading the way with a rise of eight per cent, while homes in the north-east will see valuations edge up by around three per cent.