MortgagesOct 6 2014

House prices set to fall next year: Cebr

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After growing by 7.8 per cent this year, average house prices across the UK will dip by 0.8 per cent in 2015, according to new forecasts from Centre for Economics and Business Research.

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, said the analysts, adding that buyers are beginning to baulk at high prices in the more expensive regions.

The Mortgage Market Review was also blamed for a weaker outlook in mortgage approval growth, as eligibility criteria have become tougher, curbing demand for property in the short term.

Interest rate rises from the Bank of England next year are also expected to cool house price growth in the short term, stated Cebr. 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.

Scott Corfe, head of macroeconomics at Cebr, said: “Tougher mortgage eligibility criteria, high deposit requirements and concerns about future rate rises are starting to take steam out of the UK housing market.

“Price falls next year will be modest and we shouldn’t be too worried about this - we are not anticipating a crash - the market is adjusting after getting ahead of itself at the start of 2014.”