UK house price predictions for 2016
What does 2016 have in store for house prices in the UK? We round up some of the big predictions.
If you own a home or you want to buy one, no doubt you pay some attention to property price movements. It might be a passing interest or something a bit more serious.
Many of us keep an eye out for house price reports and predictions. Many predictions are made by those with a vested interest in the housing market, so they need to be taken with a pinch of salt. And you have to be careful with house price reports, because while some measure mortgage approvals, others look at asking prices, or record sold prices.
However, taken together, data and predictions can help us to gauge certain property trends, confidence levels, and perhaps the broad strokes of where the market is heading.
With that in mind, what do the experts think will happen to house prices next year?
Halifax: 4-6% rise
Martin Ellis, housing economist at Halifax, said that while house prices look expensive compared to salary levels, the valuations are supported by the low levels of property for sale, low levels of housebuilding, and exceptionally low interest rates.
He added: “Nonetheless, with house prices continuing to increase more quickly than average earnings, it is increasingly difficult to get on the housing ladder. This ongoing development, combined with the growing prospect of an interest rate rise, should start to put the brakes on house price growth during the course of 2016. Annual house price growth nationally is expected to slow to 4-6% by the end of 2016.”
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Assetz for Investors: 6% rise
Stuart Law, CEO of the buy-to-let estate agent, said that 2016 will be a more positive year for those outside the capital, with demand for housing continuing to outstrip supply. However, in London he suggests we may actually see house prices fall.
He added: “With interest rates remaining at their record low level of just 0.5% I don’t expect to see any decrease in the number of investors looking to capitalise, but this investment will now be focused on many of the Northern Powerhouse regions which are set to benefit from greater infrastructure and regeneration over the coming years.”
Anderson Harris: 5% rise
Jonathan Harris, director of the mortgage broker Anderson Harris, highlighted that the end of 2015 has seen a pick up in transactions at the top end of the market, and suggested this will continue in 2016.
“With lenders keen to lend we expect to see a continuation of the competitive mortgage products borrowers have enjoyed this year. We expect the year overall to be a strong one, with an increase in lending volumes on 2015. Following considerable growth in property values, 2016 will be more subdued but we still expect growth of around 5% across the mainstream UK market," he concluded.
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Haart: up to 10% rise
Estate agent Haart reckons that there will be a price correction at the top end of the property market next year, particularly in London, with a 10% drop in the value of homes over £1 million.
However, this will have no bearing on the "core property market" which will see significant rises of up to 10% across the nation.
Paul Smith, CEO at Haart, added: "On paper it will look like a tale of two countries as London will see an increase of around 3-4% due to the top end market correction."
Savills: 5% rise
Estate agent Savills has broken down its 2016 predictions to a regional level, as the table below shows:
|
2016 |
|
|
UK |
5.0% |
|
London |
5.5% |
|
South East |
7.0% |
|
South West |
6.0% |
|
East of England |
6.5% |
|
East Midlands |
5.0% |
|
West Midlands |
4.5% |
|
North East |
2.5% |
|
North West |
3.0% |
|
Yorks & Humber |
3.5% |
|
Wales |
4.0% |
|
Scotland |
3.0% |
Source: Savills Research
Lucian Cook, head of Savills residentail research said: “The strongest price rises are expected in parts of the south and east of England, which offer value relative to the capital, so should benefit as the ripple gains traction. Growth beyond will depend on the strength of regional wealth generation and the ability of cities such as Manchester and Birmingham to act as catalysts to reinvigorate their housing markets.”
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Comments
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The land registry has a house price index which allows you to look at how prices have moved over many past months and years broken down by detached semi, terraced and flats, by counties regions, metropolitan boroughs and the like. The contrast in how prices have moved is quite startling. Prices in the midlands have gone above 2008 levels but only just and are rising slowly. prices in the north have just about recovered 2008 level but aren't rising at all. In parts of London prices have risen strongly well above 2008 levels, but in some areas close to the centre are now levelling off. the south and south west trends are not as good as London but better than the midlands (I don't mean to say that rising prices are a good thing!) Recently Newham in London was quoted as having the biggest rise in 2015. These indices all quote actual prices, but if you have a lot of new properties being sold then the average price reported is the average of those properties, not the average of all properties in the area, because the vast majority haven't been sold. So the indices have a bias. The number of transactions is about 2/3 of the level pre crash and so the sales of new properties carry more weight than they used to. Prices cannot go up above the ability of people to buy the properties, and we're probably seeing some evidence of that in London. Watch for prices to rise in the boroughs and outer suburbs, then the surrounding counties. My prediction prices will continue to rise generally while supply doesn't meet demand. We need to build more and squash the nimby's.
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It would be more useful with predictions from 3rd parties to display their track record. I like Haart's approach... 'up to 10%' that covers a lot of movement, including price drops. Savills approach is clearly scientific and mathematically formulated to get to a regional level (not), clearly they are having a laugh! I could give variances by postcode if asked! Still there's no getting away from the fact that predicting the other 400 variables that control house prices is impossible, and anyone of the variables can cause movements in house prices in any direction, as the author states they should all be taken with a 'pinch of salt', or possibly read and totally and utterly ignored.
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New builds in the Midlands are being released with prices that I consider aspirational. Second hand properties offer better specs eg extra garages, bigger gardens, more space etc. Government Help to Buy seems to be adding on an extra 5-10% to asking prices.
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31 December 2015