UK house prices will grow by 1.5 per cent this year according to the Centre for Economics and Business Research, in an upward revision from its January expectations of a 0.6 per cent decline in prices this year, however the London property market will see a fall of almost 4 per cent.
The impact of December’s stamp duty changes has been felt sooner than expected, with some buyers putting cash saved towards a deposit, stated the independent economics consultancy, with expectations revised up for nearly all regions other than London.
CEBR added that the capital’s property market continues to show signs of cooling, with average house prices in London expected to decline by 3.6 per cent over 2015, following years of overperformance.
The CEBR said that the strength of sterling against the euro, fears of a mansion tax and hefty new stamp duty rates on high value properties have all hit housing demand from overseas buyers.
This all means that in 2015, for the first time since 2009, house price growth will be stronger outside the capital than in London itself, with leading indicators such as fewer new buyer enquiries and properties taking longer to sell pointing to falling prices in the capital.
Outside of the capital, the decline in overseas interest in UK property will be much less strongly felt. At the same time, most homebuyers have benefited from December’s stamp duty changes as well as an improving labour market which has boosted consumer spending power.
In last year’s autumn statement, the chancellor overhauled stamp duty. Now, there is no tax payable for houses worth less than £125,000, 2 per cent on the portion of any value above this and up to £250,000, 5 per cent on the next portion up to £925,000, 10 per cent up to £1.5m, and 12 per cent thereafter.
Nina Skero, CEBR economist, explained that outside of London, the outlook for house prices this year has improved after a few months when the market appeared to be coming off the boil.
“December’s stamp duty changes, as well as rising household incomes, are lifting prices in many parts of the UK,” she added.
Last October, the organisation predicted that after growing by 7.8 per cent in 2014, average house prices across the UK would dip by 0.8 per cent in 2015, with the Mortgage Market Review blamed amongst other things for a weaker outlook in mortgage approval growth.
Yesterday (9 April), Halifax’s monthly house price index revealed that monthly house prices grew by 0.4 per cent in March, however annual growth fell slightly to 8.1 per cent from February’s 8.3 per cent.