First fall since financial crisis on the way.
The Centre for Economic and Business Research (Cebr) has predicted that house prices will fall next year, the first annual fall since the financial crisis.
After an average of 7.8% growth this year, the average house price will fall by 0.8% in 2015, according to the Cebr.
London is forecast to lead the way with the biggest drop of 2.6%, compared to a 17.5% increase throughout the course of 2014.
The Cebr argues that buyer interest is already declining. This could be attributed to the introduction of the Mortgage Market Review (MMR) in April, leading to a lower number of mortgage approvals. The lower demand has resulted in properties being on the market for longer than normal before they sell.
Demand has declined abroad as well. House prices are now above their pre-crisis peak in euro and US dollar terms, making the London housing market less attractive.
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Uncertainties
If there’s one thing the property market doesn’t like, it’s uncertainty. There’s plenty of it in the UK at the moment, primarily in politics. And that makes investing in property a less than enticing prospect.
For example, the outcome of the next general election is unclear, bringing Britain’s future relationship with the European Union into doubt. The Scottish referendum has also given the UK’s stability a shake-up, with many investors waiting for the final result before buying properties.
A potential mansion tax puts the UK’s international safe haven status at risk, acting as a possible deterrent to future foreign property investors.
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The early signs
The Cebr is not the only organisation to pinpoint house price difficulties. Last week Nationwide reported that the surge in house prices is starting to level off, with prices falling by 0.2% in September. That's the first decline since April 2013.
However, figures from the Land Registry suggest that house prices have hit a new high, as we explained in UK house prices at record high.
More on property and mortgages:
House prices fall in September
Average price of flat jumps £50,000 in 10 years